Interferon (IFN) signal transduction involves interferon regulatory factors (IRF). Kaposi's sarcoma-associated herpesvirus (KSHV) encodes four IRF homologues: viral IRF 1 (vIRF-1) to vIRF-4. Previous functional studies revealed that the first exon of vIRF-2 inhibited alpha/beta interferon (IFN-alpha/beta) signaling. We now show that full-length vIRF-2 protein, translated from two spliced exons, inhibited both IFN-alpha- and IFN-lambda-driven transactivation of a reporter promoter containing the interferon stimulated response element (ISRE). Transactivation of the ISRE promoter by IRF-1 was negatively regulated by vIRF-2 protein as well. Transactivation of a full-length IFN-beta reporter promoter by either IRF-3 or IRF-1, but not IRF-7, was also inhibited by vIRF-2 protein. Thus, vIRF-2 protein is an interferon induction antagonist that acts pleiotropically, presumably facilitating KSHV infection and dissemination in vivo.