A lentivirus was isolated from 2 goats in Mexico that were seropositive to caprine arthritis encephalitis virus (CAEV) by the agar gel immunodiffusion (AGID) test. The lentivirus was identified as CAEV by the observation of giant multinucleated cells (syncytia) in goat synovial membrane (GSM) monolayers co-cultivated with blood mononuclear (BMN) cells from the seropositive goats, and by amplifying a DNA segment of the CAEV gag gene using the polymerase chain reaction (PCR) technique. Subsequently, cell supernatants from the GSM cells co-cultivated with BMN cells were used to infect 2 CAEV-seronegative goats. These goats seroconverted to CAEV as determined by the AGID test, and CAEV was re-isolated from these goats. One of the goats developed polyarthritis 8 mo after inoculation. Previous serological surveys indicate that infection with CAEV is prevalent among goats in Mexico. To our knowledge this is the first report of CAEV isolation in Mexico. Because of globalization of markets and increased trading among nations, the rapid identification and reporting of diseases such as CAEV are important to prevent the dissemination of these diseases.