Recent data in the literature suggest that the HIV-1 Tat(1-86) protein exhibits immunosuppressive effects. Moreover, Tat was found to interact with dipeptidyl peptidase IV (DP IV), which is identical to the T cell activation marker CD26. Here we show that the N-terminal amino acid sequence of Tat is essential for the inhibition of DP IV-catalyzed IL-2(1-12) degradation. N-terminal modification of Tat with rhodamine prevented inhibition of enzymatic activity of DP IV as well as suppression of DNA synthesis of mitogen-stimulated human T cells. Moreover, natural peptides containing the X-X-Pro N-terminal motif of Tat also inhibited DP IV activity. These data suggest the existence of endogenous immunomodulatory oligopeptides which influence immune cell proliferation and differentiation via DP IV as does HIV-1 Tat.