We have characterized a distinct, late transitional B cell subset, CD21^int transitional 2 (T2) B cells. In contrast to early transitional B cells, CD21^int T2 B cells exhibit augmented responses to a range of potential microenvironmental stimuli. Adoptive transfer studies demonstrate that this subset is an immediate precursor of both follicular mature and marginal zone (MZ) B cells. In vivo, a large percentage of CD21^int T2 B cells has entered the cell cycle, and the cycling subpopulation exhibits further augmentation in mitogenic responses and B cell-activating factor of the TNF family (BAFF) receptor expression. Consistent with these features, CD21^int T2 cells exhibit preferential responses to BAFF-facilitated homeostatic signals in vivo. In addition, we demonstrate that M167 B cell receptor (BCR) idiotypic-specific B cells are first selected within the cycling CD21^int T2 population, ultimately leading to preferential enrichment of these cells within the MZ B cell compartment. These data, in association with the coordinate role for BAFF and microenvironmental cues in determining the mature BCR repertoire, imply that this subset functions as a unique selection point in peripheral B cell development.