Evasion of immune T cell responses is crucial for persistent viruses to establish a normal carrier state. Most studies on active immune modulation mechanisms have focused on the stage of virus production in infected cells, when large numbers of viral antigens and potential immune modulators are expressed. For oncogenic viruses such as Kaposi's sarcoma-associated herpesvirus (KSHV), which is carried as a lifelong infection, usually with little harmful effect, but can cause various tumors, the immune evasion strategies can also be relevant in the context of tumorigenesis. Here we report that the virus-encoded interferon regulatory factor 3 (vIRF3) latent viral gene expressed in KSHV-related tumors functions as a potent immunevasin. Expression of vIRF3 downregulates surface major histocompatibility complex class II (MHC-II) DR expression with slow kinetics but, more importantly, can substantially inhibit recognition by KSHV-specific CD4 T cells prior to its effects on MHC-II DR downregulation in model cell systems. This property of vIRF3 is only partly due to its ability to inhibit the transcription of CIITA and, thus, MHC-II expression; CIITA-independent inhibition of MHC-II transcripts and another as yet unidentified posttranscriptional mechanism are also involved in qualitatively modulating the availability of specific peptide/MHC-II complexes at the cell surface. Consistent with these observations, the vIRF3-expressing KSHV-associated primary effusion lymphoma (PEL) lines are generally resistant to recognition by KSHV-specific CD4 T cells. Interestingly, some PEL lines exhibit small subpopulations with lower vIRF3 expression that can be recognized. These data implicate vIRF3 as a critical determinant of the MHC-II antigen presentation function in KSHV-associated PELs that is likely to be important in the pathogenesis of these tumors.