During papillomavirus infection, the E5 protein localizes in the cell Golgi apparatus and other endomembrane compartments. Cells transformed by E5 do not express major histocompatibility class I complex (MHC I) on the cell surface, while cells transformed by the other transforming proteins E6 and E7 do. In addition, the total amount of both MHC I protein and mRNA is reduced in E5-transformed cells. Here we show that expression of bovine papillomavirus E5 causes the retention of MHC I in the Golgi apparatus, thus preventing its transport to the cell surface. We ascribe this effect to a failure of acidification of the Golgi apparatus, as similar effects are observed in control cells treated with the ionophore monensin. Treatment of E5-transformed cells with either beta- or gamma-interferon increases the synthesis of MHC I, showing that inhibition of MHC I expression by E5 is not irreversible. However, even after interferon treatment, MHC I, although increased in quantity, is not transported to the cell surface. E5 therefore affects MHC I at several levels, but prevention of MHC I transport to the cell surface appears to be the dominant effect. Lack of surface MHC I would have profound consequences for presentation of viral peptides to the immune system.