KSHV is a DNA tumor virus that causes Kaposi's sarcoma. Upon KSHV infection, only a limited number of latent genes are expressed. We know that KSHV infection regulates host gene expression, and hypothesized that latent genes also modulate the expression of host miRNAs. Aberrant miRNA expression contributes to the development of many types of cancer. Array-based miRNA profiling revealed that all six miRNAs of the oncogenic miR-17-92 cluster are up-regulated in KSHV infected endothelial cells. Among candidate KSHV latent genes, we found that vFLIP and vCyclin were shown to activate the miR-17-92 promoter, using luciferase assay and western blot analysis. The miR-17-92 cluster was previously shown to target TGF-β signaling. We demonstrate that vFLIP and vCyclin induce the expression of the miR-17-92 cluster to strongly inhibit the TGF-β signaling pathway by down-regulating SMAD2. Moreover, TGF-β activity and SMAD2 expression were fully restored when antagomirs (inhibitors) of miR-17-92 cluster were transfected into cells expressing either vFLIP or vCyclin. In addition, we utilized viral genetics to produce vFLIP or vCyclin knock-out viruses, and studied the effects in infected TIVE cells. Infection with wildtype KSHV abolished expression of SMAD2 protein in these endothelial cells. While single-knockout mutants still showed a marked reduction in SMAD2 expression, TIVE cells infected by a double-knockout mutant virus were fully restored for SMAD2 expression, compared to non-infected TIVE cells. Expression of either vFLIP or vCycIin was sufficient to downregulate SMAD2. In summary, our data demonstrate that vFLIP and vCyclin induce the oncogenic miR-17-92 cluster in endothelial cells and thereby interfere with the TGF-β signaling pathway. Manipulation of the TGF-β pathway via host miRNAs represents a novel mechanism that may be important for KSHV tumorigenesis and angiogenesis, a hallmark of KS.