Most antigenic peptides presented on major histocompatibility complex class I molecules are generated during protein breakdown by proteasomes, whose specificity is altered by interferon-gamma (IFN-gamma). When extended versions of the ovalbumin-derived epitope SIINFEKL are expressed in vivo, the correct C terminus is generated by proteasomal cleavage, but distinct cytosolic protease(s) generate its N terminus. To identify the other protease(s) involved in antigen processing, we incubated soluble extracts of HeLa cells with the 11-mer QLESIINFEKL, which in vivo is processed to the antigenic 8-mer (SIINFEKL) by a proteasome-independent pathway. This 11-mer was converted to the 9-mer by sequential removal of the N-terminal residues, but surprisingly the extract showed little or no endopeptidase or carboxypeptidase activity against this precursor. After treatment of cells with IFN-gamma, this N-terminal trimming was severalfold faster and proceeded to the antigenic 8-mer. The IFN-treated cells also showed greater aminopeptidase activity against many model fluorogenic substrates. Upon extract fractionation, three bestatin-sensitive aminopeptidase peaks were detected. One was induced by IFN-gamma and was identified immunologically as leucine aminopeptidase (LAP). Purified LAP, like the extracts of IFN-gamma-treated cells, processed the 11-mer peptide to SIINFEKL. Thus, IFN-gamma not only promotes proteasomal cleavages that determine the C termini of antigenic peptides, but also can stimulate formation of their N termini by inducing LAP. This enzyme appears to catalyze the trimming of the N terminus of this and presumably other proteasome-derived precursors. Thus, susceptibility to LAP may be an important influence on the generation on immunodominant epitopes.