We demonstrated that sheep are susceptible to acute and latent infection by bovine herpesvirus type-5 (BHV-5). Lambs inoculated intranasally with two South American BHV-5 isolates replicated the virus with titers up to 10(7.1) TCID50/ml for up to 15 days and showed mild signs of rhinitis. Four lambs in contact with the inoculated animals acquired the infection and excreted virus for up to seven days. One lamb developed progressive signs of neurological disease and was euthanized in extremis. Clinical signs consisted of tremors of the face, bruxism, ptyalism, incoordination, lateral flexion of the neck and head, circling, walking backwards, recumbency and paddling. The virus was detected in the anterior and posterior cerebrum, dorso- and ventro-lateral cortex, cerebellum, pons, midbrain and olfactory bulb. Viral nucleic acids were demonstrated in neurons and astrocytes of the anterior and ventro-lateral cortex by in situ hybridization. Histological changes consisting of non-suppurative meningitis, perivascular mononuclear cuffing, focal gliosis, neuronal necrosis and intranuclear inclusions were observed in the anterior cerebrum, ventro-lateral cortex and midbrain. Dexamethasone treatment at Day 50 pi resulted in reactivation of the latent infection and virus shedding in 13/16 (81%) of the lambs. Together with previous reports of BHV-5 antibodies in sheep, these findings show that sheep are fully susceptible to BHV-5 suggesting that infection by BHV-5 in sheep may occur naturally.