Caprine arthritis-encephalitis (CAE) is a persistent lentivirus infection of goats. It is often grouped together with Maedi-visna (MV) of sheep as the small ruminant lentiviruses (SRLVs). Phylogenetic analyses comparing nucleotide sequences of MV virus (MVV) and CAE virus (CAEV) have demonstrated that these are closely related lentiviruses. One source of CAEV and MVV transmission is colostrum and milk. The source of horizontal transmission in the absence of lactation remains unknown; however, faeces and lung fluids are known to harbour infectious virus. The distribution of CAEV is highest in industrialised countries, and seems to have coincided with the international movement of European breeds of dairy goats. Clinical and subclinical MV and CAE are associated with progressive, mononuclear cell inflammatory lesions in the lungs, joints, udder and central nervous system. Indurative mastitis is common in both host species, and its economic significance may be underestimated. Laboured breathing associated with emaciation caused by progressive pneumonitis is the predominant feature in clinically affected sheep, whereas polyarthritis is the main clinical sign in goats. However, most lentivirus-infected sheep and goats are largely asymptomatic, but remain persistent carriers of virus and are capable of transmitting infection via colostrum or milk and respiratory secretions. There are no vaccines available. CAEV is not a zoonotic agent.