In both mammalian and viral genomes, a large proportion of sequences are transcribed and annotated as noncoding RNAs. A polyadenylated RNA of 3.0 kb (T3.0) is transcribed from the opposite strand of the open reading frame 50 (ORF50) DNA template in the genome of Kaposi's sarcoma-associated herpesvirus (KSHV) and has been annotated previously as a noncoding RNA. ORF50 encodes the replication and transcription activator (RTA), which controls the switch of the virus between the latent and lytic phases of the life cycle. Here we show that T3.0 encodes a small peptide of 48 amino acids (designated viral small peptide 1 [vSP-1]). vSP-1 interacts with RTA at the protein abundance regulatory signal (PARS) motifs, and the association prevents RTA from being subjected to degradation through the ubiquitin-proteasome pathway. As a consequence, vSP-1 facilitates KSHV gene expression and lytic replication. This finding reveals a novel mechanism of gene regulation in the viral life cycle.