Human herpesvirus 8 (HHV-8) (also known as Kaposi's sarcoma-associated herpesvirus) encodes a novel noncoding polyadenylated nuclear (PAN) RNA (also known as T1.1 or nut-1) during the early phase of lytic replication. PAN RNA is the most abundant transcript of HHV-8, comprising 80% of total poly(A)-selected transcripts in HHV-8-infected cells during lytic replication. We directly measured the abundance of PAN RNA by visualizing 1.1- to 1.2- kb PAN RNA in an ethidium bromide-stained gel from poly(A)-selected RNA. We further pursued the mechanisms by which PAN RNA expression is induced to such high levels. rta, an immediate-early gene of HHV-8, is a transactivator that is sufficient and necessary to activate lytic gene expression in latently infected cells. Ectopic expression of Rta was previously shown to induce PAN RNA expression from the endogenous viral genome and activate the PAN promoter in a reporter system. Here, we have identified the Rta-responsive element (RRE) in the PAN promoter. Deletion analysis revealed that the RRE is present in a region between nucleotides -69 and -38 of the PAN promoter. A promoter construct containing the 69 nucleotides upstream of the transcription start site of the PAN promoter was activated by Rta in the absence or presence of the HHV-8 genome. Rta activated the PAN promoter up to 7,000-fold in 293T cells and 2,000-fold in B cells. Electrophoretic mobility shift assays demonstrated that Rta formed a highly stable complex with the RRE of the PAN promoter. Our study suggests that Rta can induce PAN RNA expression by direct binding of Rta to the RRE of the PAN promoter. This study has highlighted an important mechanism controlling PAN RNA expression and also provides a model system for investigating how Rta transactivates gene expression during lytic replication.