Abstract MHC class I molecules present peptides derived from the ectodomains of endogenous transmembrane proteins; however, the processing of these Ags is incompletely understood. As model transmembrane Ags we investigated the processing of MHC-I-derived fusion proteins containing the N-terminally extended Kb-restricted OVA epitope SIINFEKL in the extracytoplasmic domain. In TAP-deficient, nonprofessional APCs, the epitope was cleaved out of various sequence contexts and presented to T cells. Ag presentation was inhibited by acidophilic amines and inhibitors of the vacuolar proton pump, indicating processing in endosomes. Endosomal aspartic-type cathepsins, and to some extent also the trans-Golgi network protease furin, were involved in processing. Clathrin-dependent and independent internalization from the cell surface targeted MHC-I fusion proteins to early and late endosomes, where SIINFEKL/Kb complexes were detected by immunofluorescence microscopy. Targeting of MHC-I fusion proteins to processing compartments was independent of sequence motifs in the cytoplasmic tail. Not only TAP-deficient cells, but also TAP-competent APCs used the vacuolar pathway for processing of MHC-I fusion proteins. Thus, endosomal processing of internalized endogenous transmembrane proteins represents a novel alternate pathway for the generation of MHC-I-binding peptides.