UL18 is a human cytomegalovirus class I MHC (MHCI) homolog that binds the host inhibitory receptor LIR-1 and the only known viral MHC homolog that presents peptides. The 2.2-Å structure of a LIR-1/UL18/peptide complex reveals increased contacts and optimal surface complementarity in the LIR-1/UL18 interface compared with LIR/MHCI interfaces, resulting in a >1,000-fold higher affinity. Despite sharing only ≈25% sequence identity, UL18's structure and peptide binding are surprisingly similar to host MHCI. The crystal structure suggests that most of the UL18 surface, except where LIR-1 and the host-derived light chain bind, is covered by carbohydrates attached to 13 potential N-glycosylation sites, thereby preventing access to bound peptide and association with most MHCI-binding proteins. The LIR-1/UL18 structure demonstrates how a viral protein evolves from its host ancestor to impede unwanted interactions while preserving and improving its receptor-binding site.