We describe the clinicopathologic features of an arthritis outbreak in sheep induced by small ruminant lentivirus (SRLV), linked to the presence of a new SRLV isolate phylogenetically assigned to caprine arthritis encephalitis virus–like subgroup B2. Thirteen SRLV seropositive Rasa Aragonesa adult ewes were selected from 5 SRLV highly infected flocks (mean seroprevalence, 90.7%) for presenting uni- or bilateral chronic arthritis in the carpal joint. A complete study was performed, including symptomatology, histopathology, immunocytochemistry, immunohistochemistry, in situ hybridization, and microbiology. The carpus was the joint almost exclusively affected, with 10 sheep (76%) showing a moderate increase in carpal joint size (diameter range, 18–20 cm; normal range, 15–16 cm) without signs of locomotion problems and with 3 ewes (23%) showing severe inflammation with marked increase in diameter (21–24 cm), pain at palpation, and abnormal standing position. Grossly, chronic proliferative arthritis was observed in affected joints characterized by an increased thickness of the synovial capsule and synovial membrane proliferation. Microscopically, synovial membrane inflammation and proliferation and hyperplasia of synoviocytes were observed. More positive cases of SLRV infection were detected by immunocytochemistry of articular fluid than of bronchoalveolar lavage fluid. Immunohistochemistry and in situ hybridization also detected positive cells in the subsynovial connective tissue, lung, mediastinal lymph node, mammary gland, and mammary lymph node. All animals were negative for the presence of Mycoplasma or other bacteria in the articular space. The present outbreak likely represents an adaptation of a caprine virus to sheep. Our results underline the importance of the arthritis induced by SRLV in sheep, a clinical form that might be underestimated.