Stimulation of B lymphocytes with a combination of lipopolysaccharide (LPS) and interleukin‐4 (IL‐4) induces germline transcription of and subsequent switching to the epsilon heavy chain constant region (C epsilon) gene. Mature germline C epsilon transcripts contain a non‐coding exon (I epsilon exon) spliced to the C epsilon exons. To distinguish between the potential roles of germline transcription and those of germline transcripts in regulating the class switch process, we replaced the LPS‐ and IL‐4‐inducible I epsilon promoter and exon in ES cells with an LPS‐inducible E mu enhancer/VH promoter expression cassette. Wildtype, heterozygous or homozygous mutant ES cells were injected into RAG‐2 deficient blastocysts to generate somatic chimeras in which all B cells derived from ES cells. In contrast to normal B cells, heterozygous and homozygous mutant B cells had substantial transcription through the epsilon switch recombination region (S epsilon) following treatment with LPS alone and, under these conditions, both underwent low level switching (10‐ to 100‐fold less than wildtype cells stimulated with LPS + IL‐4) to IgE production. Heterozygous mutant cells underwent switching to IgE at essentially wildtype levels when stimulated with LPS and IL‐4. However, homozygous mutant cells still showed extremely low levels of switching to IgE upon LPS and IL‐4 stimulation. Analyses of hybridomas from heterozygous mutants indicated that the mutation is cis‐acting and normal switching to other isotypes indicated that it is specific for IgE. Thus transcription per se generates low levels of class switch recombination in the absence of I region sequences. However, we demonstrate for the first time that, for optimal efficiency, the process requires the presence of the intact I region and/or I region promoter in cis, implicating factors beyond transcription through the S region in the regulation of class switching.