Kaposi's sarcoma-associated herpesvirus (KSHV) is a human tumor virus expressing latent antigens critical for pathogenesis. The mechanism by which KSHV mediates oncogenesis has not been fully elucidated. Notch signaling is an evolutionarily conserved pathway controlling diverse events related to development, proliferation, and tissue homeostasis. Deregulation of Notch signaling has also been shown to be highly correlated with oncogenesis. Here we show that the activated intracellular domain of Notch1 (ICN) is aberrantly accumulated in latently KSHV-infected pleural effusion lymphoma cells and results in increased proliferation. Specifically, growth of the infected cells was dramatically inhibited at the G(1) phase by treatment with a gamma-secretase inhibitor which specifically blocks the production of ICN. Increased ICN also up-regulated the cyclin D1 cell cycle regulator. Taken together, these studies define an important mechanism directly linking latent KSHV infection to induction of oncogenesis through dysregulation of the conserved Notch signaling pathway.