The encapsulated yeast Cryptococcus neoformans is a significant cause of opportunistic infection in patients with impaired cell-mediated immunity. The major virulence determinant of the organism is an antiphagocytic polysaccharide capsule synthesized after entry into the host. Using both an encapsulated virulent strain and an acapsular avirulent mutant, we have demonstrated the reduced ability of the encapsulated strain to stimulate specific T-cell responses in vitro. This reduction was mediated by the antiphagocytic action of the capsule rather than by direct inhibition of antigen processing and presentation, since prior opsonization with complement enhanced the ingestion of encapsulated yeast cells by purified antigen-presenting cells and allowed significant T-cell activation. Once ingestion had occurred, cryptococci were efficiently processed by activated macrophages via a chloroquine-sensitive pathway. Cryptococcal antigens were available for T-cell recognition within 1 to 2 h of interaction with macrophages and presented in a major histocompatibility complex-restricted manner. Our results suggest that the antiphagocytic action of the polysaccharide capsule is an important determinant for the development of T-cell immunity to C. neoformans.