We investigated interactions between CD4+ T cells and dendritic cells (DC) necessary for presentation of exogenous Ag by DC to CD8+ T cells. CD4+ T cells responding to their cognate Ag presented by MHC class II molecules of DC were necessary for induction of CD8+ T cell responses to MHC class I-associated Ag, but their ability to do so depended on the manner in which class II-peptide complexes were formed. DC derived from short-term mouse bone marrow culture efficiently took up Ag encapsulated in IgG FcR-targeted liposomes and stimulated CD4+ T cell responses to Ag-derived peptides associated with class II molecules. This CD4+ T cell-DC interaction resulted in expression by the DC of complexes of class I molecules and peptides from the Ag delivered in liposomes and permitted expression of the activation marker CD69 and cytotoxic responses by naive CD8+ T cells. However, while free peptides in solution loaded onto DC class II molecules could stimulate IL-2 production by CD4+ T cells as efficiently as peptides derived from endocytosed Ag, they could not stimulate induction of cytotoxic responses by CD8+ T cells to Ag delivered in liposomes into the same DC. Signals requiring class II molecules loaded with endocytosed Ag, but not free peptide, were inhibited by methyl-beta-cyclodextrin, which depletes cell membrane cholesterol. CD4+ T cell signals thus require class II molecules in cholesterol-rich domains of DC for induction of CD8+ T cell responses to exogenous Ag by inducing DC to process this Ag for class I presentation.