Processing of exogenous antigens and microbes involves contributions by multiple different endocytic and phagocytic compartments. During the processing of soluble antigens, different endocytic compartments have been demonstrated to use distinct antigen-processing mechanisms and to process distinct sets of antigenic epitopes. Processing of particulate and microbial antigens involves phagocytosis and functions contributed by phagocytic compartments. Recent data from our laboratory demonstrate that phagosomes containing antigen-conjugated latex beads are fully competent class II MHC (MHC-II) antigen-processing organelles, which generate peptide:MHC-II complexes. In addition, phagocytosed antigen enters an alternate class I MHC (MHC-I) processing pathway that results in loading of peptides derived from exogenous antigens onto MHC-I molecules, in contrast to the cytosolic antigen source utilized by the conventional MHC-I antigen-processing pathway. Antigen processing and other immune response mechanisms may be activated or inhibited by microbial components to the benefit of either the host or the pathogen. For example, antigen processing and T-cell responses (e.g. Th1 vs Th2 differentiation) are modulated by multiple distinct microbial components, including lipopolysaccharide, cholera toxin, heat labile enterotoxin of Escherichia coli, DNA containing CpG motifs (found in prokaryotic and invertebrate DNA but not mammalian DNA) and components of Mycobacterium tuberculosis.