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 G(1) 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/EBPalpha and p21(CIP-1) proteins in the nucleus of the same cells. The KSHV RAP protein binds to C/EBPalpha in vitro and stimulates C/EBPalpha-induced expression from both the C/EBPalpha and p21 promoters in cotransfected cells. A recombinant adenovirus expressing the RAP protein induced the expression of both the C/EBPalpha and p21 proteins in primary human fibroblasts, and flow cytometric analysis revealed a dramatic inhibition of G(1) to S cell cycle progression in the same cells. All of these effects were abolished in cells that lack C/EBPalpha or by deletion of the basic/leucine zipper region in RAP that interacts with C/EBPalpha. Therefore, C/EBPalpha is essential for the p21-mediated inhibition of G(1) to S-phase progression by RAP in KSHV-infected host cells.