Autoantibody-mediated diseases targeting one autoantigen provide a unique opportunity to comprehensively understand the development of disease-causing B cells and autoantibodies. Convention suggests that such autoreactivities are generated during germinal center reactions. Here, we explore earlier immune checkpoints, focusing on patients with contactin-associated protein-like 2 (CASPR2)-autoantibody encephalitis. In both disease and health, high (~0.5%) frequencies of unmutated CASPR2-reactive naïve B cells were identified. By contrast, CASPR2-reactive memory B cells were exclusive to patients, and their B cell receptors demonstrated affinity-enhancing somatic mutations with pathogenic effects in neuronal cultures and mice. The unmutated, precursor memory B cell receptors showed a distinctive balance between strong CASPR2 reactivity and very limited binding across the remaining human proteome. Our results identify permissive central tolerance, defective peripheral tolerance, and autoantigen-specific tolerance thresholds in humans as sequential steps that license CASPR2-directed pathology. By leveraging the basic immunobiology, we rationally direct tolerance-restoring approaches, with an experimental paradigm applicable across autoimmunity.