Kaposi's sarcoma (KS)-associated herpesvirus (KSHV), a gamma-2 herpesvirus, is the causative agent of KS, primary effusion lymphoma (PEL), and a plasma cell variant of multicentric Castleman's disease. Although KSHV latency is detected in KS-related tumors, oncogenic pathways activated by KSHV latent infection are not fully understood. Here, we found that retrotransposition of long interspersed element-1 (L1), a retrotransposon in the human genome, was enhanced in PEL cells. Among the KSHV latent genes, viral FLICE-inhibitory protein (vFLIP) enhanced L1 retrotransposition in an NF-κB-dependent manner. Intracellular cell adhesion molecule-1 (ICAM-1), an NF-κB target, regulated the vFLIP-mediated enhancement of L1 retrotransposition. Furthermore, ICAM-1 downregulated the expression of Moloney leukemia virus 10 (MOV10), an L1 restriction factor. Knockdown of ICAM-1 or overexpression of MOV10 relieved the vFLIP-mediated enhancement of L1 retrotransposition. Collectively, during KSHV latency, vFLIP upregulates ICAM-1 in an NF-κB-dependent manner, which, in turn, downregulates MOV10 expression and thereby enhances L1 retrotransposition. Because active L1 retrotransposition can lead to genomic instability, which is commonly found in KS and PEL, activation of L1 retrotransposition during KSHV latency may accelerate oncogenic processes through enhancing genomic instability. Our results suggest that L1 retrotransposition may be a novel target for impeding tumor development in KSHV-infected patients.