We recently reported a mouse model called ACE 10/10 in which macrophages over express the carboxypeptidase angiotensin converting enzyme (ACE). These mice have an enhanced inflammatory response to tumors that markedly inhibits tumor growth. Here, we show that ACE modifies the C-termini of peptides for presentation by MHC class I molecules. The peptide-processing activity of ACE applies to antigens from either the extracellular environment (cross-presentation) or antigens produced endogenously. Consistent with its role in MHC class I antigen processing, ACE localizes to the endoplasmic reticulum. ACE over expression does not appear to change the overall supply of peptides available to MHC class I molecules. The immunization of wild type mice, previously given ACE 10/10 macrophages, enhances the efficiency of antigen-specific CD8+ T cell priming. These data reveal that ACE is a dynamic participant in fashioning the peptide repertoire for MHC class I molecules by modifying the C-termini of peptide precursors. Manipulation of peptidase expression by antigen presenting cells may ultimately prove a useful strategy to enhance the immune response.