Peptides bind cell surface MHC class II proteins to yield complexes capable of activating CD4+ T cells. By contrast, protein Ags require internalization and processing by APC before functional presentation. Here, T cell recognition of a short peptide in the context of class II proteins occurred only after delivery of this ligand to mature endosomal/lysosomal compartments within APC. Functional and biochemical studies revealed that a central cysteine within the peptide was cysteinylated, perturbing T cell recognition of this epitope. Internalization and processing of the modified epitope by APC, was required to restore T cell recognition. Peptide cysteinylation and reduction could occur rapidly and reversibly before MHC binding. Cysteinylation did not disrupt peptide binding to class II molecules, rather the modified peptide displayed an enhanced affinity for MHC at neutral pH. However, once the peptide was bound to class II proteins, oxidation or reduction of cysteine residues was severely limited. Cysteinylation has been shown to radically influence T cell responses to MHC class I ligands. The ability of professional APC to reductively cleave this peptide modification presumably evolved to circumvent a similar problem in MHC class II ligand recognition.