The class I major histocompatibility complex (MHC class I) presents 8-10 residue peptides to cytotoxic T lymphocytes. Most of these antigenic peptides are generated during protein degradation in the cytoplasm and are then transported into the endoplasmic reticulum by the transporter associated with antigen processing (TAP). Several lines of evidence have indicated that the proteasome is the major proteolytic activity responsible for generation of antigenic peptides--probably most conclusive has been the finding that specific inhibitors of the proteasome block antigen presentation. However, other proteases (e.g. the signal peptidase) may also generate some epitopes, particularly those on certain MHC class I alleles. The proteasome is responsible for generating the precise C termini of many presented peptides, and appears to be the only activity in cells that can make this cleavage. In contrast, aminopeptidases in the cytoplasm and endoplasmic reticulum can trim the N terminus of extended peptides to their proper size. Interestingly, the cellular content of proteases involved in the production and destruction of antigenic peptides is modified by interferon-gamma (IFN-gamma) treatment of cells. IFN-gamma induces the expression of three new proteasome beta subunits that are preferentially incorporated into new proteasomes and alter their pattern of peptidase activities. These changes are likely to enhance the yield of peptides with C termini appropriate for MHC binding and have been shown to enhance the presentation of at least some antigens. IFN-gamma also upregulates leucine aminopeptidase, which should promote the removal of N-terminal flanking residues of antigenic peptides. Also, this cytokine downregulates the expression of a metallo-proteinase, thimet oligopeptidase, that actively destroys many antigenic peptides. Thus, IFN-gamma appears to increase the supply of peptides by stimulating their generation and decreasing their destruction. The specificity and content of these various proteases should determine the amount of peptides available for antigen presentation. Also, the efficiency with which a peptide is presented is determined by the protein's half life (e.g. its ubiquitination rate) and the sequences flanking antigenic peptides, which influence the rates of proteolytic cleavage and destruction.