Marginal zone (MZ) B cells contain a large number of autoreactive clones and the expansion of this compartment has been associated with autoimmunity. MZ B cells also efficiently transport blood-borne antigen to the follicles where they activate T cells and differentiate into plasma cells. Using the B6.NZM2410.Sle1.Sle2.Sle3 (B6.TC) model of lupus, we show that the IgM+ CD1d(hi)/MZ B-cell compartment is expanded, and a large number of them reside inside the follicles. Contrary to the peripheral B-cell subset distribution and their activation status, the intrafollicular location of B6.TC IgM+ CD1d(hi)/MZ B cells depends on both bone marrow- and stromal-derived factors. Among the factors responsible for this intrafollicular location, we have identified an increased response to CXCL13 by B6.TC MZ B cells and a decreased expression of VCAM-1 on stromal cells in the B6.TC MZ. However, the reduced number of MZ macrophages observed in B6.TC MZs was independent of the IgM+ CD1d(hi)/B-cell location. B7-2 but not B7-1 deficiency restored IgM+ CD1d(hi)/MZ B-cell follicular exclusion in B6.TC mice, and it correlated with tolerance to dsDNA and a significant reduction of autoimmune pathology. These results suggest that follicular exclusion of IgM+ CD1d(hi)/MZ B cells is an important B-cell tolerance mechanism, and that B7-2 signaling is involved in breaching this tolerance checkpoint.