In antigen presentation to CD4(+) T cells, proteins are degraded to peptide fragments and loaded onto class II MHC molecules in a process involving the peptide exchange factors H-2M (murine) or HLA-DM (human). In many antigen-presenting cells these processes occur in intracellular endosomal compartments, where peptides are generated and loaded onto class II MHC proteins for subsequent transport to the surface and presentation to T cells. Here, we provide evidence for an additional antigen-processing pathway in immature dendritic cells (DC). Immature DC express at the cell surface empty or peptide-receptive class II MHC molecules, as well as H-2M or HLA-DM. Secreted DC proteases act extracellularly to process intact proteins into antigenic peptides. Peptides produced by such activity are efficiently loaded onto cell surface class II MHC molecules. Together these elements comprise an unusual extracellular presentation pathway in which antigen processing and peptide loading can occur entirely outside of the cell.