Microbes and other particulate antigens (Ags) are internalized by phagocytosis and then reside in plasma membrane-derived phagosomes. The contribution of phagosomes to the degradation of Ags has long been appreciated. It has been unclear, however, whether peptides derived from these degraded antigens bind class II major histocompatibility complex (MHC-II) molecules within phagosomes or within endocytic compartments that receive Ag fragments from phagosomes. Recent experiments have demonstrated that phagosomes containing Ag-conjugated latex beads express a full complement of Ag-processing molecules, e.g. MHC-II molecules, invariant chain, H2-DM and proteases sufficient to degrade bead- associated Ag. These phagosomes mediate the formation of peptide-MHC-II complexes, which are transported to the cell surface and presented to T cells. Phagosomes acquire both newly synthesized and plasma membrane-derived MHC-II molecules, but the formation of peptide-MHC-II complexes in phagosomes primarily involves newly synthesized MHC-II molecules. The content and traffic of phagosomal proteins vary considerably with the type of Ag ingested. Pathogenic microbes can alter phagosome composition and function to reduce Ag processing. For example, Mycobacterium tuberculosis blocks the maturation of phagosomes and reduces the ability of infected cells to present exogenous soluble protein Ags.