PURPOSE. Retinal pigmented epithelial (RPE) cells may contribute to retinal immune privilege. Daily phagocytosis and degradation of photoreceptor cell outer segment tips by RPE provide substantial amounts of retinal autoantigens for potential MHC occupancy. RPE are well placed to modulate antigen (Ag)-specific activation of T cells in the outer retina under conditions in which inflammatory mediators may upregulate major histocompatibility complex (MHC) on RPE cells. The Ag-presenting ability of RPE cells was examined to determine whether they induce Ag-dependent modulation of CD4 T-cell activity. METHODS. The effects of RPE on Ag-specific activation of naive, Ag-specific CD4 T cells were tested in cultures with immortalized, syngeneic murine RPE cells. Flow cytometry, proliferation, and cytokine production were used to assess T-cell activation and phenotype. RESULTS. Naive CD4 T cells exposed to peptide-pulsed RPE upregulated expression of CD25, CD69, and CD44, showing receptor occupancy. However, T-cell proliferation and production of IL-2, IL-17, and IFN-γ were severely depressed. Provision of whole β-gal, as opposed to β-gal peptide, gave no evidence of T-cell activation. T cells recovered from RPE cocultures were hyporesponsive to restimulation with splenic APC and Ag, but did not exhibit significant regulatory activity. Although CD25 was upregulated on RPE-activated T cells, expression of FoxP3 was similar to that found after activation with splenic APC and Ag. The inhibitory activity of RPE was dominant, since T-cell activation remained inhibited if splenic APCs were included in the cocultures. CONCLUSIONS. RPE cells directly presented extracellular peptides through MHC class II to naive CD4 T cells, leading to an anergic state in the T cells. The anergic T cells survived, but were not immunoregulatory. The ability to modulate T-cell responsiveness in this manner may underlie the contribution of the RPE to immune privilege.