The degradation of cytoplasmic antigens to peptides presented by class I MHC molecules is thought to be mediated by the ubiquitin/proteasome pathway. Support for this view came from our observation that the subunit composition of proteasomes can be changed by interferon-gamma (IFN-gamma) treatment. Thereby two subunits, LMP2 and LMP7, which are encoded in the MHC class II region, are incorporated into the proteasomal complex, whereas other subunits disappear. In the experiments reported in this communication we studied the subunit changes occurring in cell lines where the expression of LMP2 or LMP7 can be regulated individually either by IFN-gamma induction or by applying a new system to control the expression of transfected LMPs. In both situations LMP2 induction leads exclusively to the disappearance of housekeeping subunit 2, whereas LMP7 affects only subunit 10. Subunit 2 was found to be 76% homologous to LMP2. Since incorporation of LMP2 into the proteasomal complex prevents processing of the subunit 2 precursor, we conclude that LMP2 displaces subunit 2 during assembly. Subunit displacement is most likely a general mechanism to modulate the catalytic activity of the proteasomal complex without changing its structure. Furthermore, the controlled incorporation of transfected subunits into the complex offers a new approach to study proteasome function in vivo.