[show abstract][hide abstract] ABSTRACT: The gammaherpesviruses, including Epstein-Barr virus (EBV) and Kaposi's sarcoma-associated herpesvirus (KSHV), establish latency in memory B lymphocytes and promote lymphoproliferative disease in immunocompromised individuals. The precise immune mechanisms that prevent gammaherpesvirus reactivation and tumorigenesis are poorly defined. Murine gammaherpesvirus 68 (MHV68) is closely related to EBV and KSHV, and type I (alpha/beta) interferons (IFNαβ) regulate MHV68 reactivation from both B cells and macrophages by unknown mechanisms. Here we demonstrate that IFNβ is highly upregulated during latent infection, in the absence of detectable MHV68 replication. We identify an interferon-stimulated response element (ISRE) in the MHV68 M2 gene promoter that is bound by the IFNαβ-induced transcriptional repressor IRF2 during latency in vivo. The M2 protein regulates B cell signaling to promote establishment of latency and reactivation. Virus lacking the M2 ISRE (ISREΔ) overexpresses M2 mRNA and displays uncontrolled acute replication in vivo, higher latent viral load, and aberrantly high reactivation from latency. These phenotypes of the ISREΔ mutant are B-cell-specific, require IRF2, and correlate with a significant increase in virulence in a model of acute viral pneumonia. We therefore identify a mechanism by which a gammaherpesvirus subverts host IFNαβ signaling in a surprisingly cooperative manner, to directly repress viral replication and reactivation and enforce latency, thereby minimizing acute host disease. Since we find ISREs 5' to the major lymphocyte latency genes of multiple rodent, primate, and human gammaherpesviruses, we propose that cooperative subversion of IFNαβ-induced IRFs to promote latent infection is an ancient strategy that ensures a stable, minimally-pathogenic virus-host relationship.