Nuclear factor-kappaB (NF-kappaB) is a transcription factor that plays an important role in the immune system and cell death. Many viral proteins modulate NF-kappaB to escape host immune surveillance, promote cell survival, and enhance viral replication. In the present study, we show that NF-kappaB activity is downmodulated by viral interferon regulatory factor 3 (vIRF3), which is encoded by Kaposi's sarcoma-associated herpesvirus open-reading frame K10.5. vIRF3 repressed NF-kappaB-dependent transcription in a dose-dependent manner and inhibited the activation of NF-kappaB induced by tumor necrosis factor (TNF)-alpha. In vivo studies showed vIRF3 inhibited IkappaB kinase beta (IKKbeta) activity, but not IKKalpha activity, resulting in reduced IkappaB phosphorylation. Immunofluorescence assays showed that vIRF3 interfered with nuclear translocation of NF-kappaB. In addition, consistent with the inhibition of NF-kappaB activity, vIRF3 sensitized cells to TNF-alpha-induced apoptosis. While vIRF3 interacts with IKKbeta in vitro and in 293T cells, we were unable to demonstrate vIRF3-IKKbeta interaction in BCBL-1 cells. Our results indicate that vIRF3 can regulate the host immune system and apoptosis via inhibition of NF-kappaB activity.