Down-regulation of the cell surface display of class I MHC proteins is an important mechanism of immune evasion by human and animal viruses. Herpesviruses in particular encode a variety of proteins that function to lower MHC I display by several mechanisms. These include binding and retention of MHC I chains in the endoplasmic reticulum, dislocation of class I chains from the ER, inhibition of the peptide transporter (TAP) involved in antigen presentation, and shunting of newly assembled chains to lysosomes. Kaposi's sarcoma (KS)-associated herpesvirus (KSHV) is a human herpesvirus strongly linked to the development of KS and to certain AIDS-associated lymphoproliferative disorders. Here we show that KSHV encodes two distinctive gene products that function to dramatically reduce cell surface MHC I expression. These viral proteins are localized predominantly to the ER. However, unlike previously described MHC I inhibitors, they do not interfere with the synthesis, translocation, or assembly of class I chains, nor do they retain them in the ER. Rather, they act to enhance endocytosis of MHC I from the cell surface; internalized class I chains are delivered to endolysosomal vesicles, where they undergo degradation. These KSHV proteins define a mechanism of class I down-regulation distinct from the mechanisms of other herpesviruses and are likely to contribute importantly to immune evasion during viral infection.