The ubiquitin-like modifier (ULM) HLA-F adjacent transcript 10 (FAT10) is encoded in the MHC locus, is up-regulated during dendritic cell maturation, is highly expressed in lymphoid tissues, and strongly induced by interferon (IFN)-γ and tumor necrosis factor (TNF)-α. FAT10 is the only ULM known to date which directly targets its hundreds of substrates for degradation by the proteasome. This implies a role for FAT10 in antigen presentation. Indeed, fusion of FAT10 to viral proteins enhanced their presentation along the proteasome dependent MHC class I presentation pathway. In this review we discuss the FAT10 conjugation system as an alternative and distinct pathway for MHC class I and II antigen processing. Furthermore, we review the recent finding that FAT10 plays a role in antimicrobial defense against intracellular pathogens.