The Kaposi's sarcoma‐associated herpes virus gene product K3 (KK3) subverts the MHC class I antigen presentation pathway by downregulating MHC class I from the plasma membrane. We now show that KK3 associates with MHC class I molecules and promotes ubiquitylation of class I after export from the endoplasmic reticulum. Ubiquitylation requires the KK3 N‐terminal plant homeodomain and provides the signal for class I internalization at the plasma membrane. Once internalized, ubiquitylated MHC class I is targeted to the late endocytic pathway, where it is degraded. Depletion by small interfering RNA of TSG101, a ubiquitin enzyme 2 variant protein involved in late endosomal sorting, prevents class I degradation and preserves cell surface class I expression in KK3‐expressing cells. These results suggest a mechanism by which the KK3‐induced class I ubiquitylation provides a signal for both internalization and sorting to the late endosomal pathway for degradation. KK3 is the first viral gene product that subverts the trafficking of a host protein via the ubiquitin‐dependent endosomal sorting machinery.