Kaposi's sarcoma-associated herpesvirus (KSHV) is an oncogenic herpesvirus associated with multiple AIDS-related malignancies. Like other herpesviruses, KSHV has a biphasic life cycle and both the lytic and latent phases are required for tumorigenesis. Evidence suggests that KSHV lytic replication can cause genome instability in KSHV-infected cells, although no mechanism has thus far been described. A surprising link has recently been suggested between mRNA export, genome instability and cancer development. Notably, aberrations in the cellular transcription and export complex (hTREX) proteins have been identified in high-grade tumours and these defects contribute to genome instability. We have previously shown that the lytically expressed KSHV ORF57 protein interacts with the complete hTREX complex; therefore, we investigated the possible intriguing link between ORF57, hTREX and KSHV-induced genome instability. Herein, we show that lytically active KSHV infected cells induce a DNA damage response and, importantly, we demonstrate directly that this is due to DNA strand breaks. Furthermore, we show that sequestration of the hTREX complex by the KSHV ORF57 protein leads to this double strand break response and significant DNA damage. Moreover, we describe a novel mechanism showing that the genetic instability observed is a consequence of R-loop formation. Importantly, the link between hTREX sequestration and DNA damage may be a common feature in herpesvirus infection, as a similar phenotype was observed with the herpes simplex virus 1 (HSV-1) ICP27 protein. Our data provide a model of R-loop induced DNA damage in KSHV infected cells and describes a novel system for studying genome instability caused by aberrant hTREX.