The biosynthesis of MHC Class II molecules starts with the assembly of the alpha and beta subunits and the invariant chain. Intracellular transport of Class II molecules was followed in pulse-chase experiments of a human Epstein-Barr virus-transformed B lymphoblastoid cell line. Entry of Class II molecules into the endocytotic pathway and their cell surface appearance were monitored using neuraminidase as a fluid endocytotic marker and as a surface probe, respectively. In the course of intracellular transport, the Class II associated invariant chain is removed by proteases located in the endosomal pathway. Here, we show that leupeptin inhibits not only invariant chain breakdown, but also surface deposition of newly synthesized Class II molecules. Class II molecules display remarkable resistance to SDS at ambient temperature when occupied by peptide. We exploit this property to show that peptide binding precedes surface expression, and takes place in the course of intracellular transport through an endosomal compartment. Leupeptin blocks the conversion of Class II molecules to an SDS resistant complex.