The immune system can recognize antigenic peptides derived from tumors by their presentation on MHC class I complexes to CTLs. Immunoproteasomes (i20S) can substantially enhance the MHC class I peptide repertoire, making down-regulation of i20S an important strategy of tumor cells in manipulating immune surveillance. Here, we report that human cancer cells express the nonfunctional immunosubunit-variant LMP7E1, in addition to, or instead of LMP7E2, in response to IFN-gamma. This preferential expression of LMP7E1 and the consequent down-regulation of LMP7E2 results in i20S deficiency. The molecular explanation for this phenomenon is the incapacity of LMP7E1 to interact efficiently with the proteasome maturation protein, which regularly recruits LMP7E2 into nascent i20S precursor complexes. In contrast to previous reports, i20S formation in these cancer cells cannot be restored by IFN-gamma treatment. However, expression of LMP7E2 in these cells restores the i20S-deficient phenotype. Thus, our data describe a novel mechanism that contributes to the process of oncogenesis.