The small ubiquitin-like modifier (SUMO) is a protein that regulates a wide variety of cellular processes by covalent attachment of SUMO moieties to a diverse array of target proteins. Sumoylation also plays an important role in the replication of many viruses. Previously, we showed that Kaposi's sarcoma-associated herpesvirus (KSHV) encodes a SUMO-ligase, K-bZIP, which catalyzes sumoylation of host and viral proteins. We report here that this virus also encodes a gene that functions as a SUMO-targeting ubiquitin-ligase (STUbL) which preferentially targets sumoylated proteins for degradation. K-Rta, the major transcriptional factor which turns on the entire lytic cycle, was recently found to have ubiquitin ligase activity toward a selected set of substrates. We show in this study that K-Rta contains multiple SIMs (SUMO interacting motif) and binds SUMOs with higher affinity toward SUMO-multimers. Like RNF4, the prototypic cellular STUbL, K-Rta degrades SUMO-2/3 and SUMO-2/3 modified proteins, including promyelocytic leukemia (PML) and K-bZIP. PML-NBs (nuclear bodies) or ND-10 are storage warehouses for sumoylated proteins, which negatively regulate herpesvirus infection, as part of the intrinsic immune response. Herpesviruses have evolved different ways to degrade or disperse PML bodies, and KSHV utilizes K-Rta to inhibit PML-NBs formation. This process depends on K-Rta's ability to bind SUMO, as a K-Rta SIM mutant does not effectively degrade PML. Mutations in the K-Rta Ring finger-like domain or SIM significantly inhibited K-Rta transactivation activity in reporter assays and in the course of viral reactivation. Finally, KSHV with a mutation in the Ring finger-like domain or SIM of K-Rta replicates poorly in culture, indicating that reducing SUMO-conjugates in host cells is important for viral replication. To our knowledge, this is the first virus which encodes both a SUMO ligase and a SUMO-targeting ubiquitin ligase that together may generate unique gene regulatory programs.