Type II collagen (CII) is an arthritogenic self antigen in DBA/1 (H-2q) mice. To analyze the intracellular processing of this fibrillar protein in the context of I-Aq molecules, we have generated hybrid antigen-presenting cells (APC) by fusion of B lymphoma (A20 and M12) cells with CII-primed spleen cells from DBA/1 mice. Efficient presentation of CII by these APC to specific T cell hybridomas required prior cleavage of the antigen and intracellular handling of the peptides. Inhibition of protein transport by brefeldin A prevented the presentation of CII peptides to T cell hybridomas, indicating that the intracellular presentation of CII was dependent on neo-synthesis of I-Aq molecules. In contrast, exposure of hybrid B lymphomas to leupeptin, a protease inhibitor, induced a dose-dependent increase of CII-specific T cell response, while abrogating the I-Aq-restricted presentation of ovalbumin. The enhancing effect of leupeptin was also observed when immune B cells were used as APC. In contrast, leupeptin inhibited the presentation of CII peptides by macrophages or total spleen cells. Pulse-chase analysis of metabolically labeled hybrid APC and immunoprecipitation with antibodies specific for class II molecules or invariant (li) chain revealed that leupeptin did not affect the li chain processing or the formation of stable class II dimers. The stimulatory effect of leupeptin observed on CII presentation suggests that leupeptin protects CII epitopes by interfering with proteases involved in the intracellular degradation of CII.