Herpesvirus saimiri (HVS), a member of the γ -2 subgroup of herpesviruses, naturally infects squirrel monkeys (Saimiri sciureus) of South America. HVS persists in T lymphocytes of the natural host without any apparent disease, but infection of other species of New World primates results in fulminant lymphomas, lymphosarcomas, and leukemias of T cell origin. Tip of Herpesvirus saimiri associates with Lck and downregulates Lck signal transduction. Here we demonstrate that Tip targets a novel cellular lysosomal protein p80 that consists of an amino terminal WD repeat domain and a carboxyl terminal coiled-coil domain. p80 mRNA is ubiquitously expressed and its size is around 4kb. Interaction of Tip with p80 facilitated lysosomal vesicle formation and subsequent recruitment of Lck into the lysosomes for degradation. Consequently, Tip interactions with Lck and p80 results in downregulation of T cell receptor (TCR) and CD4 surface expression. Remarkably, these actions of Tip are functionally and genetically separable: the amino terminal p80 interaction is responsible for TCR downregulation and the carboxyl terminal Lck interaction is responsible for CD4 downregulation. Moreover, purification of the lipid rafts from Jurkat-T cells expressing Tip revealed that TCR, Lck and Tip proteins are associated with the lipid rafts, and recruits p80 protein into the lipid rafts. The detailed confocal microscopy using Tip mutants showed that Tip and p80 interaction is critical for TCR internalization. Thus, lymphotropic herpesvirus has evolved an elaborate mechanism to deregulate lymphocyte receptor expression to disarm host immune control.