During biosynthesis, MHC class II associates with invariant chain which exists in two forms, p31 and p41. Both forms of invariant chain prevent peptide binding to class II, facilitate transport, and enhance class II localization to Ag-processing compartments. In spite of these shared functions, presentation of some Ags can be selectively enhanced by expression of p41. Here we show that p41 can function as a protease inhibitor: 1) the functional and biochemical consequences of p41 expression can be mimicked by inhibiting cysteine proteases in vivo; 2) the amount of intracellular active cysteine proteases is dramatically decreased in p41-positive cells; and 3) a polypeptide corresponding to the p41-unique region is a potent inhibitor of cathepsin L in vitro. These data suggest that p41 can enhance Ag presentation by reducing the proteolytic activity of the Ag-processing compartment, thus protecting a subset of antigenic epitopes from excessive degradation.