The effect of membrane viscosity on the dynamics of vesicles in shear flow is studied. We present a new simulation technique, which combines three-dimensional multiparticle collision dynamics for the solvent with a dynamically triangulated membrane model. Vesicles are found to transit from steady tank treading to unsteady tumbling motion with increasing membrane viscosity. Depending on the reduced volume and membrane viscosity, shear can induce both discocyte-to-prolate and prolate-to-discocyte transformations. This behavior can be understood from a simplified model.