T cell stimulation by the human immunodeficiency virus 1 gp160-derived peptide p18 presented by H-2Dd class I major histocompatibility complex molecules in a cell-free system was found to require proteolytic cleavage. This extracellular processing was mediated by peptidases present in fetal calf serum. In vitro processing of p18 resulted in a distinct reverse phase high performance liquid chromatography profile, from which a biologically active product was isolated and sequenced. This peptide processing can be specifically blocked by the angiotensin-1 converting enzyme (ACE) inhibitor captopril, and can occur by exposing p18 to purified ACE. The ability of naturally occurring extracellular proteases to convert inactive peptides to T cell antigens has important implications for understanding cytotoxic T lymphocyte responses in vivo, and for rational peptide vaccine design.