Members of the papain family of cysteine proteases (cathepsins) mediate late stage processing of MHC class II-bound invariant chain (Ii), enabling dissociation of Ii, and binding of antigenic peptide to class II molecules. Recognition of cell surface class II/Ag complexes by CD4(+) T cells then leads to T cell activation. Herein, we demonstrate that a pan-active cathepsin inhibitor, SB-331750, attenuated the processing of whole cell Ii p10 to CLIP by Raji cells, and DBA/1, SJL/J, and C57BL/6 splenocytes. In Raji cells and C57BL/6 splenocytes, SB-331750 inhibited class II-associated Ii processing and reduced surface class II/CLIP expression, whereas in SB-331750-treated DBA/1 and SJL/J splenocytes, class II-associated Ii processing intermediates were undetectable. Incubation of lymph node cells/splenocytes from collagen-primed DBA/1 mice and myelin basic protein-primed SJL/J mice with Ag in the presence of SB-331750 resulted in concentration-dependent inhibition of Ag-induced proliferation. In vivo administration of SB-331750 to DBA/1, SJL/J, and C57BL/6 mice inhibited splenocyte processing of whole cell Ii p10 to CLIP. Prophylactic administration of SB-331750 to collagen-immunized/boosted DBA/1 mice delayed the onset and reduced the severity of collagen-induced arthritis (CIA), and reduced paw tissue levels of IL-1beta and TNF-alpha. Similarly, treatment of myelin basic protein-primed SJL/J lymph node cells with SB-331750 delayed the onset and reduced the severity of adoptively transferred experimental autoimmune encephalomyelitis (EAE). Therapeutic administration of SB-331750 reduced the severity of mild/moderate CIA and EAE. These results indicate that pharmacological inhibition of cathepsins attenuates CIA and EAE, potentially via inhibition of Ii processing, and subsequent Ag-induced T cell activation.