We have investigated the expression and function of a novel protein encoded by open reading frame (ORF) K7 of Kaposi's sarcoma-associated herpesvirus (KSHV). Computational analyses revealed that K7 is structurally related to survivin-DeltaEx3, a splice variant of human survivin that protects cells from apoptosis by an undefined mechanism. Both K7 and survivin-DeltaEx3 contain a mitochondrial-targeting sequence, an N-terminal region of a BIR (baculovirus IAP repeat) domain and a putative BH2 (Bcl-2 homology)-like domain. These suggested that K7 is a new viral anti-apoptotic protein and survivin-DeltaEx3 is its likely cellular homologue. We show that K7 is a glycoprotein, which can inhibit apoptosis and anchor to intracellular membranes where Bcl-2 resides. K7 does not associate with Bax, but does bind to Bcl-2 via its putative BH2 domain. In addition, K7 binds to active caspase-3 via its BIR domain and thus inhibits the activity of caspase-3. The BH2 domain of K7 is crucial for the inhibition of caspase-3 activity and is therefore essential for its anti-apoptotic function. Furthermore, K7 bridges Bcl-2 and activated caspase-3 into a protein complex. K7 therefore appears to be an adaptor protein and part of an anti-apoptotic complex that presents effector caspases to Bcl-2, enabling Bcl-2 to inhibit caspase activity. These data also suggest that survivin-DeltaEx3 might function by a similar mechanism to that of K7. We denote K7 as vIAP (viral inhibitor-of-apoptosis protein).