Primary effusion lymphomas (PELs) associated with infection by the Kaposi's sarcoma-associated herpesvirus (KSHV/HHV-8) have constitutive nuclear factor (NF)-kappaB activity that is essential for their survival, but the source of this activity is unknown. We report that viral FADD-like interleukin-1-beta-converting enzyme [FLICE/caspase 8]-inhibitory protein (FLIP) activates NF-kappaB more potently than cellular FLIP in B cells and that it is largely responsible for NF-kappaB activation in latently infected PEL cells. Elimination of vFLIP production in PEL cells by RNA interference results in significantly decreased NF-kappaB activity, down-regulation of essential NF-kappaB-regulated cellular prosurvival factors, induction of apoptosis, and enhanced sensitivity to external apoptotic stimuli. vFLIP is the first virally encoded gene shown to be essential for the survival of naturally infected tumor cells.