The most recently identified human herpesvirus is Kaposi's sarcoma-associated herpesvirus (KSHV). It causes Kaposi's sarcoma, a tumour occurring most commonly in untreated AIDS patients and the leading cancer of men in certain parts of Africa. KSHV might also contribute to the pathogenesis of primary effusion lymphoma and multicentric Castleman's disease. The genome of KSHV contains 86 genes, almost a quarter of which encode proteins with either demonstrated or potential immunoregulatory activity. They include homologues of cellular proteins and unique KSHV proteins that can deregulate many aspects of the immune response, including T- and B-cell functions, complement activation, the innate antiviral interferon response and natural killer cell activity. The functions of these proteins and the ways in which they perturb the normal immune response are the subjects of the present review.