Little is known about herpesvirus modulation of T cell activation in latently infected individuals or the implications of such for chronic immune disorders. Murine gammaherpesvirus 68 (MHV68) elicits persistent activation of CD8(+) T cells bearing a Vbeta4(+) T cell receptor (TCR) by a completely unknown mechanism. We show that a novel MHV68 protein encoded by the M1 gene is responsible for Vbeta4(+) CD8(+) T cell stimulation in a manner reminiscent of a viral superantigen. During infection, M1 expression induces a Vbeta4(+) effector T cell response that resists functional exhaustion and appears to suppress virus reactivation from peritoneal cells by means of long-term interferon-gamma (IFNgamma) production. Mice lacking an IFNgamma receptor (IFNgammaR(-/-)) fail to control MHV68 replication, and Vbeta4(+) and CD8(+) T cell activation by M1 instead contributes to severe inflammation and multiorgan fibrotic disease. Thus, M1 manipulates the host CD8(+) T cell response in a manner that facilitates latent infection in an immunocompetent setting, but promotes disease during a dysregulated immune response. Identification of a viral pathogenecity determinant with superantigen-like activity for CD8(+) T cells broadens the known repertoire of viral immunomodulatory molecules, and its function illustrates the delicate balance achieved between persistent viruses and the host immune response.