H2-M3 is a class Ib MHC molecule of the mouse with a 104-fold preference for binding N-fonmylated peptides. To elucidate the basis of this unusual specificity, we expressed and crystallized a soluble form of M3 with a fonnylated nonamer peptide, fMYFINILTL, and determined the structure by X-ray crystallography. M3, refined at 2.1 Å resolution, resembles class la MHC molecules in its overall structure, but differs in the peptide-binding groove. The A pocket, which usually accommodates the free N-terminus of a bound peptide, is closed, and the peptide Is shifted one residue, such that the P1 side chain is lodged in the B pocket. The formyl group Is coordinated by His-9 and a bound water on the floor of the groove.