Intracellular antigens must be processed before presentation to CD8+ T cells by major histocompatibility complex (MHC) class I molecules. Using a recombinant vaccinia virus (Vac) to transiently express the Kd molecule, we studied the antigen processing efficiency of 26 different human tumor lines. Three cell lines, all human small cell lung carcinoma, consistently failed to process endogenously synthesized proteins for presentation to Kd-restricted, Vac-specific T cells. Pulse-chase experiments showed that MHC class I molecules were not transported by these cell lines from the endoplasmic reticulum to the cell surface. This finding suggested that peptides were not available for binding to nascent MHC molecules in the endoplasmic reticulum. Northern blot analysis of these cells revealed low to nondetectable levels of mRNAs for MHC-encoded proteasome components LMP-7 and LMP-2, as well as the putative peptide transporters TAP-1 and TAP-2. Treatment of cells with interferon gamma enhanced expression of these mRNAs and reversed the observed functional and biochemical deficits. Our findings suggest that downregulation of antigen processing may be one of the strategies used by tumors to escape immune surveillance. Potential therapeutic applications of these findings include enhancing antigen processing at the level of the transcription of MHC-encoded proteasome and transporter genes.