Kaposi sarcoma-associated herpesvirus (KSHV) is an oncogenic DNA virus that causes Kaposi sarcoma and AIDS-related primary effusion lymphoma (PEL). Here we show that KSHV lytic cycle replication in PEL cells induces G₁ cell cycle arrest, presumably to facilitate the progression of viral DNA replication. Expression of a KSHV-encoded early lytic protein referred to as RAP or K8 is induced within 12–24 h after the onset of lytic cycle induction in host PEL cells, and coincides with increased levels of both the endogenous C/EBPα and p21^CIP-1 proteins in the nucleus of the same cells. The KSHV RAP protein binds to C/EBPα in vitro and stimulates C/EBPα-induced expression from both the C/EBPα and p21 promoters in cotransfected cells. A recombinant adenovirus expressing the RAP protein induced the expression of both the C/EBPα and p21 proteins in primary human fibroblasts, and flow cytometric analysis revealed a dramatic inhibition of G₁ to S cell cycle progression in the same cells. All of these effects were abolished in cells that lack C/EBPα or by deletion of the basic/leucine zipper region in RAP that interacts with C/EBPα. Therefore, C/EBPα is essential for the p21-mediated inhibition of G₁ to S-phase progression by RAP in KSHV-infected host cells.