The Nef protein of HIV-1 mediates immune evasion by relocating major histocompatibility complex (MHC) molecules and the immune costimulatory molecules CD80 and CD86 away from the monocytic cell surface. We describe a two-pronged mechanism by which Nef removes CD80 and CD86 from the cell surface. While MHCI, CD80, and CD86 are all internalized via a dynamin-independent pathway, the endocytic mechanism used for costimulatory molecules is distinct from MHCI relocation. Nef expression results in the activation and actin-dependent translocation of Src kinase to the cell periphery. At the cell surface, Src promotes Rac activation via TIAM, a guanine nucleotide exchange factor for Rac. Nef also binds to the cytosolic tails of CD80 and CD86, triggering their endocytosis via Rac-based actin polymerization. These data reveal the use of an unusual molecular mechanism triggered in the host cell by HIV to affect its viral immune evasion strategy and suggest approaches for its subversion.