Kaposi's sarcoma-associated herpesvirus (KSHV), also known as human herpesvirus-8, is the causative agent of three hyperproliferative disorders: Kaposi's sarcoma, primary effusion lymphoma (PEL) and multicentric Castleman's disease. During viral latency a small subset of viral genes are produced, including KSHV latency-associated nuclear antigen (LANA), which help the virus thwart cellular defense responses. We found that exposure of KSHV-infected cells to oxidative stress, or other inducers of apoptosis and caspase activation, led to processing of LANA and that this processing could be inhibited with the pan-caspase inhibitor Z-VAD-FMK. Using sequence, peptide, and mutational analysis, two caspase cleavage sites within LANA were identified: a site for caspase-3 type caspases at the N-terminus and a site for caspase-1 and-3 type caspases at the C-terminus. Using LANA expression plasmids, we demonstrated that mutation of these cleavage sites prevents caspase-1 and caspase-3 processing of LANA. This indicates that these are the principal sites that are susceptible to caspase cleavage. Using peptides spanning the identified LANA cleavage sites, we show that caspase activity can be inhibited in vitro and that a cell-permeable peptide spanning the C-terminal cleavage site could inhibit cleavage of poly (ADP-ribose) polymerase and increase viability in cells undergoing etoposide-induced apoptosis. The C-terminal peptide of LANA also inhibited interleukin-1 beta (IL-1β) production from lipopolysaccharide-treated THP-1 cells by more than 50%. Furthermore, mutation of the two cleavage sites in LANA led to a significant increase in IL-1β production in transfected THP-1 cells; this provides evidence that these sites function to blunt the inflammasome, which is known to be activated in latently infected PEL cells. These results suggest that specific caspase cleavage sites in KSHV LANA function to blunt apoptosis as well as interfere with the caspase-1-mediated inflammasome, thus thwarting key cellular defense mechanisms.