Human herpesvirus 8 (HHV-8)/Kaposi's sarcoma-associated herpesvirus infection goes through lytic and latent phases that are regulated by viral gene products, but very little is known about the involvement of host proteins. The replication and transcription activator (RTA) is a viral protein sufficient to initiate lytic replication by activating downstream genes, including the viral early gene open reading frame 57 (ORF 57), which codes for a posttranscriptional activator. In this study, we demonstrate that cellular interferon regulatory factor 7 (IRF-7) negatively regulates this process by competing with RTA for binding to the RTA response element in the ORF 57 promoter to down-regulate RTA-induced gene expression. We also show that alpha interferon represses RTA-mediated transactivation and that repression involves IRF-7. Our study indicates that upon HHV-8 infection, the host responds by suppression of lytic gene expression through binding of IRF-7 to the lytic viral gene promoter. These findings suggest that HHV-8 has developed a novel mechanism to induce but then subvert the innate antiviral response, specifically the interferon-signaling pathway, to regulate RTA activity and ultimately the viral latent/lytic replicative cycle.