Intravesical administration of Bacillus Calmette-Guérin (BCG) is the most effective therapy for superficial transitional cell carcinoma of the bladder although its mechanism of action is not known. To determine if bladder tumors are capable of antigen presentation and thus might interact directly with BCG-specific T-cells, we studied the murine bladder tumor MB49. MB49 (MHC Class II negative) (IA-), when induced to express IA with interferon, presented BCG to specific CD4+ T-cells obtained from bladder-draining lymph nodes following intravesical BCG administration. This interaction resulted in antigen- and IA-dependent interleukin 2 and tumor necrosis factor production. Interferon also induced MB49 IA expression in vivo. This first demonstration of antigen presentation by epithelial tumors supports new approaches to immunotherapy of these malignancies.