The paracaspase MALT1 mediates T cell antigen receptor-induced signaling to the transcription factor NF-kappaB and is indispensable for T cell activation and proliferation. Enhanced expression of MALT1 or aberrant expression of a fusion protein of the apoptosis inhibitor API2 and MALT1 has been linked to mucosa-associated lymphoid tissue lymphoma. Despite the presence of a caspase-like domain, MALT1 proteolytic activity has not yet been demonstrated. Here we show that T cell antigen receptor stimulation induced recruitment of the NF-kappaB inhibitor A20 into a complex of MALT1 and the adaptor protein Bcl-10, leading to MALT1-mediated processing of A20. API2-MALT1 expression likewise resulted in cleavage of A20. MALT1 cleaved human A20 after arginine 439 and impaired its NF-kappaB-inhibitory function. Our studies identify A20 as a substrate of MALT1 and emphasize the importance of MALT1 proteolytic activity in the 'fine tuning' of T cell antigen receptor signaling.