Squamous cell carcinoma of the head and neck (SCCHN) cells are poorly recognized in vitro by CTL despite expressing the restricting HLA class I allele and the targeted tumor Ag (TA). Several lines of evidence indicate that the lack of SCCHN cell recognition by CTL reflects defects in targeted TA peptide presentation by HLA class I Ag to CTL because of Ag-processing machinery (APM) dysfunction. First, lack of recognition of SCCHN cells by CTL is associated with marked down-regulation of the IFN-gamma-inducible APM components low-m.w. protein 2, TAP1, TAP2, and tapasin. Second, SCCHN cell recognition by CTL is restored by pulsing cells with exogenous targeted TA peptide. Third, the restoration of CTL recognition following incubation of SCCHN cells with IFN-gamma is associated with a significant (p = 0.001) up-regulation of the APM components TAP1, TAP2, and tapasin. Lastly, and most conclusively, SCCHN cell recognition by CTL is restored by transfection with wild-type TAP1 cDNA. Our findings may explain the association between APM component down-regulation and poor clinical course of the disease in SCCHN. Furthermore, the regulatory nature of the APM defects in SCCHN cells suggests that intralesional administration of IFN-gamma may have a beneficial effect on the clinical course of the disease and on T cell-based immunotherapy of SCCHN by restoring SCCHN cell recognition by CTL.