We examined the function of LIP5 in mammalian cells, because the yeast homologue Vta1p was recently identified as a protein required for multivesicular body (MVB) formation. LIP5 is predominantly a cytosolic protein. Depletion of LIP5 by small inhibitory RNA (siRNA) does not affect the distribution or morphology of early endosomes, lysosomes, or Golgi but does reduce the degradation of internalized epidermal growth factor receptor (EGFR), with EGFR accumulating in intracellular vesicles. Depletion of LIP5 by siRNA also decreases human immunodeficiency virus type 1 (HIV-1) budding by 70%. We identify CHMP5 as a LIP5-binding protein and show that CHMP5 is primarily cytosolic. Depletion of CHMP5 by siRNA does not affect the distribution or morphology of early endosomes, lysosomes, or Golgi but does result in reduced degradation of the EGFR similar to silencing of LIP5. Surprisingly, CHMP5 depletion results in an increase in the release of infectious HIV-1 particles. Overexpression of CHMP5 with a large carboxyl-terminal epitope affects the distribution of both early and late endocytic compartments, whereas overexpression of LIP5 does not alter the endocytic pathway. Comparison of overexpression and siRNA phenotypes suggests that the roles of these proteins in MVB formation may be more specifically addressed using RNA interference and that both LIP5 and CHMP5 function in MVB sorting, whereas only LIP5 is required for HIV release.