Like other herpesviruses, Kaposi's sarcoma-associated herpesvirus (KSHV, also designated human herpesvirus 8) can establish a latent infection in the infected host. During latency a small number of genes are expressed. One of those genes encodes latency-associated nuclear antigen (LANA), which is constitutively expressed in cells during latent as well as lytic infection. LANA has previously been shown to be important for the establishment of latent episome maintenance through tethering of the viral genome to the host chromosomes. Under specific conditions, KSHV can undergo lytic replication, with the production of viral progeny. The immediate-early Rta, encoded by open reading frame 50 of KSHV, has been shown to play a critical role in switching from viral latent replication to lytic replication. Overexpression of Rta from a heterologous promoter is sufficient for driving KSHV lytic replication and the production of viral progeny. In the present study, we show that LANA down-modulates Rta's promoter activity in transient reporter assays, thus repressing Rta-mediated transactivation. This results in a decrease in the production of KSHV progeny virions. We also found that LANA interacts physically with Rta both in vivo and in vitro. Taken together, our results demonstrate that LANA can inhibit viral lytic replication by inhibiting expression as well as antagonizing the function of Rta. This suggests that LANA may play a critical role in maintaining latency by controlling the switch between viral latency and lytic replication.