Data from previous multiparameter fluorescence-activated cell sorter (FACS) analysis and sorting studies define a subset of murine B cells that expresses the Ly-1 surface determinant in conjunction with IgM, IgD, Ia, and other typical B cell markers. These Ly-1 B cells are physically and functionally distinct. They express more IgM and less IgD than most other B cells; they are not normally found in lymph node or bone marrow; they are always present at low frequencies (1-5%) in normal spleens, and, as we show here, they comprise about half of the B cells (10-20% of total cells) recovered from the peritoneal cavity in normal mice. Furthermore, most of the commonly studied IgM autoantibodies in normal and autoimmune mice are produced by these Ly-1 B cells, even though they seldom produce antibodies to exogenous antigens such as trinitrophenyl-Ficoll or trinitrophenyl-keyhole limpet hemocyanin. Cell transfer studies presented here demonstrate that the progenitors of Ly-1 B cells are different from the progenitors of the predominant B cell populations in spleen and lymph node. In these studies, we used FACS analysis and functional assays to characterize donor-derived (allotype-marked) B cells present in lethally irradiated recipients 1-2 mo after transfer. Surprisingly, adult bone marrow cells typically used to reconstitute B cells in irradiated recipients selectively failed to reconstitute the Ly-1 B subset. Liver, spleen, and bone marrow cells from young mice, in contrast, reconstituted all B cells (including Ly-1 B), and peritoneal "washout" cells (PerC) from adult mice uniquely reconstituted Ly-1 B. Bone marrow did not block Ly- 1 B development, since PerC and newborn liver still gave rise to Ly-1 B when jointly transferred with marrow. These findings tentatively assign Ly-1 B to a distinct developmental lineage originating from progenitors that inhabit the same locations as other B cell progenitors in young animals, but move to unique location(s) in adults.