We have previously shown that exogenous CLIP (class II associated invariant chain peptide) downregulated MHC class II expression on antigen presenting cells (APC) and modulated T cell mediated immune responses. The present study was undertaken to investigate the mechanism of uptake of exogenously added CLIP peptide by APC. We found that exogenous CLIP is rapidly internalized by APC and it co-localize with MHC class II in intracellular compartments including early-, late-endosomes and lysosomes. We suggest that exogenous CLIP acts as an in vivo regulator of immune response by internalization and passage through the intracellular compartments where it interferes in peptide loading and recycling of MHC class II molecules to the APC surface. Therefore, exogenous CLIP regulates immune responses by modulation of antigen presentation by the APC.