Previously, we have shown that thiopalmitoylation of peptides of myelin proteolipid protein, as occurs naturally in vivo, increases their ability to induce experimental autoimmune encephalomyelitis, the animal model of multiple sclerosis, and skews the autoimmune response toward a CD4(+)-mediated response. In contrast, the same peptide, when synthesized with a stable amide bond between peptide and lipid, inhibits experimental autoimmune encephalomyelitis and skews the response toward a CD8(+) response. The aim of the current study was to determine the mechanisms responsible for these observations. We show that proteolipid protein lipopeptides, when synthesized with a thioester bond between the lipid and the peptide, are taken up into APCs via an actin-independent endocytic route, the thioester bond is cleaved in the endosome, and the peptide is subsequently displayed on the surface of the APC in the context of MHC class II. The same peptide, when synthesized with the lipid attached via a stable amide bond, rapidly enters into the cytoplasm of the APC and forms micelles; however, the bond between peptide and lipid is not cleaved, and the micelles travel via the endoplasmic reticulum to complex with MHC class I. These findings have implications for vaccine development and for the development of MHC class II-restricted autoimmune diseases, as many human autoantigens thus far identified are thioacylated.