The transmembrane envelope (TM) proteins of retroviruses possess immunosuppressive properties. Both purified TM proteins and synthetic peptides corresponding to a highly conserved immunosuppressive (isu) domain have been shown to inhibit immune responses in vitro and in vivo. Immunization with TM proteins carrying mutations in the isu domain induces significantly stronger immune responses compared to immunization with the unmodified protein. The isu peptide of HIV-1 promotes increased secretion of IL-10, IL-6, and other cytokines from human peripheral blood mononuclear cells (PBMCs). Microarray analyses revealed that the expression of IL-6, IL-8, IL-10, MMP-1, TREM-1, and IL-1β is upregulated following exposure to this peptide. In a mouse tumor model, tumor cells that were normally non-tumorigenic in immunocompetent animals acquired tumorigenic capacity when expressing the TM protein or isu domain of various retroviruses on their surface. To further investigate these effects, we expressed the TM protein p15E of the porcine endogenous retrovirus (PERV) on the surface of human 293 cells and co-cultured them with human PBMCs. This interaction led to the release of IL-6 and IL-10 proteins and the modulation of multiple cytokines and other markers, including IL-6, IL-10, IFN-α, TNF-α, MMP1, and SEPP1. Moreover, p15E expression reduced MHC class I expression and conferred protection against cellular cytotoxicity. Based on these and previous findings, we propose that expression of the immunosuppressive p15E protein of PERV on the surface of pig xenotransplants could attenuate immune rejection and potentially reduce the need for pharmacological immunosuppression.