Tetherin (CD317/BST2) is an interferon-induced membrane protein that inhibits the release of diverse enveloped viral particles. Several mammalian viruses have evolved countermeasures that inactivate tetherin, with the prototype being the HIV-1 Vpu protein. Here we show that the human herpesvirus Kaposi's sarcoma-associated herpesvirus (KSHV) is sensitive to tetherin restriction and its activity is counteracted by the KSHV encoded RING-CH E3 ubiquitin ligase K5. Tetherin expression in KSHV-infected cells inhibits viral particle release, as does depletion of K5 protein using RNA interference. K5 induces a species-specific downregulation of human tetherin from the cell surface followed by its endosomal degradation. We show that K5 targets a single lysine (K18) in the cytoplasmic tail of tetherin for ubiquitination, leading to relocalization of tetherin to CD63-positive endosomal compartments. Tetherin degradation is dependent on ESCRT-mediated endosomal sorting, but does not require a tyrosine-based sorting signal in the tetherin cytoplasmic tail. Importantly, we also show that the ability of K5 to substitute for Vpu in HIV-1 release is entirely dependent on K18 and the RING-CH domain of K5. By contrast, while Vpu induces ubiquitination of tetherin cytoplasmic tail lysine residues, mutation of these positions has no effect on its antagonism of tetherin function, and residual tetherin is associated with the trans-Golgi network (TGN) in Vpu-expressing cells. Taken together our results demonstrate that K5 is a mechanistically distinct viral countermeasure to tetherin-mediated restriction, and that herpesvirus particle release is sensitive to this mode of antiviral inhibition.