Human cytomegalovirus (HCMV) evades T-cell recognition by down-regulating expression of major histocompatibility complex (MHC) class I and II molecules on the surfaces of infected cells. Contrary to the "missing-self" hypothesis, HCMV-infected cells are refractory to lysis by natural killer (NK) cells. Inhibition of NK cell function is mediated by a number of HCMV immune evasion molecules, which operate by delivering inhibitory signals to NK cells and preventing engagement of activating ligands. One such molecule is UL142, which is an MHC class I-related glycoprotein encoded by clinical isolates and low-passage-number strains of HCMV. UL142 is known to down-modulate surface expression of MHC class I-related chain A (MICA), which is a ligand of the activating NK receptor NKG2D. However, the mechanism by which UL142 interferes with MICA is unknown. Here, we show that UL142 localizes predominantly to the endoplasmic reticulum (ER) and cis-Golgi apparatus. The transmembrane domain of UL142 mediates its ER localization, while we propose that the UL142 luminal domain is involved in its cis-Golgi localization. We also confirm that UL142 down-modulates surface expression of full-length MICA alleles while having no effect on the truncated allele MICA*008. However, we demonstrate for the first time that UL142 retains full-length MICA alleles in the cis-Golgi apparatus. In addition, we propose that UL142 interacts with nascent MICA en route to the cell surface but not mature MICA at the cell surface. Our data also demonstrate that the UL142 luminal and transmembrane domains are involved in recognition and intracellular sequestration of full-length MICA alleles.