Kaposi's sarcoma-associated herpesvirus (KSHV) is a gammaherpesvirus linked to the development of Kaposi's sarcoma and a rare B cell lymphoma, primary effusion lymphoma. The KSHV gene ORF K9 encodes vIRF which is a protein with low but significant homology to members of the interferon (IFN) regulatory factor (IRF) family responsible for regulating intracellular interferon signal transduction (Moore PS, Boshoff C, Weiss RA and Chang Y. (1996). Science, 274, 1739-1744). vIRF inhibits IFN-beta signal transduction as measured using an IFN-responsive ISG54 reporter construct co-transfected with ORF K9 into HeLa and 293 cells. vIRF also suppresses genes under IFN regulatory control as shown by inhibition of the IFN-beta inducibility of p21WAF1/CIP1, however, no direct DNA-binding or protein-protein interactions characteristic for IRF repressor proteins were identified. Stable transfectant NIH3T3 clones expressing vIRF grew in soft agar and at low serum concentrations, lost contact inhibition and formed tumors after injection into nude mice indicating that vIRF has the properties of a viral oncogene. Since vIRF is primarily expressed in KSHV-infected B cells, not KS spindle cells, this study suggests that vIRF is a transforming oncogene active in B cell neoplasias that may provide a unique immune escape mechanism for infected cells. This data is consistent with tumor suppressor pathways serving a dual function as host cell antiviral pathways.