Cytotoxic T lymphocytes (CTL) recognize antigenic peptides bound to major histocompatibility complex class I antigens on the cell surface of virus-infected cells. It is believed that the majority of peptides originate from cytoplasmic degradation of proteins assumed to be mediated by the "20S" proteasome. Cytosolic peptides are then translocated, presumably by transporters associated with antigen processing (TAP-1 and -2), into the lumen of the endoplasmic reticulum (ER) where binding and formation of the ternary complex between heavy chain, beta2-microglobulin (beta 2m) and peptide occurs. In this study, we have analyzed and compared the phenotype of two mutant cell lines, the thymoma cell line RMA-S and a small lung carcinoma cell line CMT.64, in order to address the mechanism that underlies the antigen processing deficiency of CMT.64 cells. Unlike RMA-S cells, vesicular stomatitis virus (VSV)-infected CMT.64 cells are not recognized by specific CTL. Interferon gamma (IFN-gamma) treatment of CMT.64 cells restores the ability of these cells to process and present VSV in the context of Kb. We show that although CMT.64 cells express a low level of beta 2m, the recognition of VSV-specific CTL is not restored by increasing the amount of beta 2m synthesized in CMT.64 cells. In addition, we find that CMT.64 cells express moderate levels of Kb heavy chain molecules, but most of it is unstable and rapidly degraded in the absence of IFN-gamma treatment. We infer that the antigen processing deficiency does not lie at the level of beta 2m or Kb production. We find also that the mRNAs for both TAP-1 and -2 are present in RMA and RMA-S cells but are absent in uninduced CMT.64 cells. Upon IFN-gamma induction, both mRNAs are highly expressed in CMT-64 cells. In addition, we find that the low molecular mass polypeptides 2 and 7, and additional components of the proteasome are induced by IFN-gamma in CMT-64 cells. Finally, introduction of the rat TAP-1 gene in CMT.64 cells restores CTL recognition of VSV-infected cells. These results indicate that a TAP-1 homodimer may translocate peptides in the ER and explain partially the CMT.64 defect and the RMA-S phenotype. These findings link a dysfunction in the transport and/or generation of antigenic peptides to the capacity of tumor cells to evade immunosurveillance and provide a unique model system to dissect this phenomenon.