Kaposi's sarcoma-associated herpesvirus (KSHV) encodes a cellular dihydrofolate reductase (DHFR) homologue. Methotrexate (MTX), a potent anti-inflammatory agent, inhibits cellular DHFR activity. We investigated the effect of noncytotoxic doses of MTX on latency and lytic KSHV replication in two KSHV-infected primary effusion lymphoma cell lines (BC-3 and BC-1) and in MTX-resistant BC-3 cells (MTX-R-BC-3 cells). Treatment with MTX completely prevented tetradecanoyl phorbol acetate-induced viral DNA replication and strongly decreased viral lytic transcript levels, even in MTX-resistant cells. However, the same treatment had no effect on transcription of cellular genes and KSHV latent genes. One of the lytic transcripts inhibited by MTX, ORF50/Rta (open reading frame), is an immediate-early gene encoding a replication-transcription activator required for expression of other viral lytic genes. Therefore, transcription of genes downstream of ORF50/Rta was inhibited, including those encoding the viral G-protein-coupled receptor (GPCR), viral interleukin-6, and K12/kaposin, which have been shown to be transforming in vitro and oncogenic in mice. Resistance to MTX has been documented in cultured cells and also in patients treated with this drug. However, MTX showed an inhibitory activity even in MTX-R-BC-3 cells. Two currently available antiherpesvirus drugs, cidofovir and foscarnet, had no effect on the transcription of these viral oncogenes and ORF50/Rta. MTX is the first example of a compound shown to downregulate the expression of ORF50/Rta and therefore prevent viral transforming gene transcription. Given that the expression of these genes may be important for tumor development, MTX could play a role in the future management of KSHV-associated malignancies.