Cell-mediated immunity is effective against cells harboring active virus replication and is critical for the elimination of ongoing infections, opposing tumor progression, and reducing or preventing the reactivation of persistent viruses and tumor metastasis. The capacity of persistent viruses and tumor cells to maintain a long-term relationship with their host presupposes mechanisms for circumventing antiviral or antitumor defenses. By suppressing the expression of molecules associated with antigen processing and presentation, abrogation of the major immune mechanism that deals with the elimination of infected and transformed cells is achieved. This is accomplished in tumors predominantly by transcriptional downregulation of genes encoding class I major histocompatibility complex antigens, peptide transporter molecules, and the proteasome-associated low molecular mass protease subunits, and in cells expressing vital proteins by interfering with peptide transport and the assembly/transport of class I complexes. In addition, virus-infected cells and selected tumor cells express mainly nonimmunogenic or antagonistic peptide epitopes. This review describes mechanisms used by viruses and in transformed cells for interference with antigen processing and presentation and addresses their significance for in vivo viral persistence and tumor progression.