Mucosal immune surveillance depends on M cells that reside in the epithelium overlying Peyer's patch and nasopharyngeal associated lymphoid tissue to transport particles to underlying lymphocytes. M cell development is associated with B lymphocytes in a basolateral pocket, but the interactions between these cells are poorly understood. In a cell culture model of M cell differentiation, we found lymphotoxin/tumor necrosis factor alpha induction of CD137 (TNFRSF9) protein on intestinal epithelial cell lines, raising the possibility that CD137 on M cells in vivo might interact with CD137L expressed by B cells. Accordingly, while CD137-deficient mice produced UEA-1+ M cell progenitors in nasopharyngeal associated lymphoid tissue and Peyer's patch epithelium, they showed an abnormal morphology, including the absence of basolateral B cell pockets. More important, CD137-deficient nasopharyngeal associated lymphoid tissue M cells were defective in microparticle transcytosis. Bone marrow irradiation chimeras confirmed that while induction of UEA-1+ putative M cell precursors was not CD137-dependent, full M cell transcytosis function required expression of CD137 by radioresistant stromal cells as well as by bone marrow-derived cells. These results are consistent with a two-step model of M cell differentiation, with initial CD137-independent commitment to the M cell lineage followed by a CD137-CD137L interaction of M cells with CD137-activated B lymphocytes or dendritic cells for functional maturation.