Dendritic cells (DCs) effectively process exogenous and endogenous Ag and present peptide in the context of both class I and class II molecules. We have demonstrated that peripheral blood DCs efficiently degrade synthetic class I peptides at their cell surface within minutes as determined by analyzing DC supernatants by HPLC. Fragments were verified as bona fide cleavage products by direct sequencing using collision-induced dissociation tandem mass spectrometry. The predominant degradative activities were 1) not secreted but associated with activity at the plasma membrane, 2) ecto-orientated, 3) not induced by peptide-specific interactions, and 4) not associated with nonspecific uptake. Sequence analysis indicated that both N-and C-terminal as well as endoproteolytic events were occurring at the cell surface. The primary exoproteolytic event was identified as CD13 or CD13-like activity through inhibition studies and could be inhibited by ubiquitin and metal-chelating agents. Endoproteolytic events could be inhibited in the presence of DTT, but the precise nature of this enzyme is still undetermined. Compared with the starting monocyte population, DCs cultured in the presence of granulocyte-macrophage CSF/IL-4 exhibited the highest degradative rate (4.3 nmol/min), followed by cultured monocytes (2.9 nmol/min) and freshly isolated monocytes (1.0 nmol/min). In addition to increased enzymatic activity, a change in substrate specificity was noted. Results are discussed with respect to APC loading, and alternatives are offered for circumventing such degradation.