Breast milk transmission remains a major mode of infant HIV acquisition, yet anatomic and immunologic forces shaping virus quasispecies in milk are not well characterized. In this study, phylogenic analysis of envelope sequences of milk SIV variants revealed groups of nearly identical viruses, indicating local virus production. However, comparison of the patterns and rates of CTL escape of blood and milk virus demonstrated only subtle differences between the compartments. These findings suggest that a substantial fraction of milk viruses are produced by locally-infected cells, but are shaped by cellular immune pressures similar to that in the blood.