The adenovirus (Ad) early transcription unit 3 (E3) encodes multiple immunosubversive functions that are presumed to facilitate the establishment and persistence of infection. Indeed, the capacity of E3/19K to inhibit transport of HLA class I (HLA-I) to the cell surface, thereby preventing peptide presentation to CD8(+) T cells, has long been recognized as a paradigm for viral immune evasion. However, HLA-I downregulation has the potential to render Ad-infected cells vulnerable to natural killer (NK) cell recognition. Furthermore, expression of the immediate-early Ad gene E1A is associated with efficient induction of ligands for the key NK cell-activating receptor NKG2D. Here we show that while infection with wild-type Ad enhances synthesis of the NKG2D ligands, major histocompatibility complex class I chain-related proteins A and B (MICA and MICB), their expression on the cell surface is actively suppressed. Both MICA and MICB are retained within the endoplasmic reticulum as immature endoglycosidase H-sensitive forms. By analyzing a range of cell lines and viruses carrying mutated versions of the E3 gene region, E3/19K was identified as the gene responsible for this activity. The structural requirements within E3/19K necessary to sequester MICA/B and HLA-I are similar. In functional assays, deletion of E3/19K rendered Ad-infected cells more sensitive to NK cell recognition. We report the first NK evasion function in the Adenoviridae and describe a novel function for E3/19K. Thus, E3/19K has a dual function: inhibition of T-cell recognition and NK cell activation.