Kaposi's sarcoma (KS) is a multifocal angiogenic tumor and appears to be a hyperplastic disorder caused, in part, by local production of inflammatory cytokines. The K1 lymphocyte receptor-like protein of KS-associated herpesvirus (KSHV) efficiently transduces extracellular signals to elicit cellular activation events through its cytoplasmic immunoreceptor tyrosine-based activation motif (ITAM). To further delineate K1-mediated signal transduction, we purified K1 signaling complexes and identified its cellular components. Upon stimulation, the K1 ITAM was efficiently tyrosine phosphorylated and subsequently interacted with cellular Src homology 2 (SH2)-containing signaling proteins Lyn, Syk, p85, PLCgamma2, RasGAP, Vav, SH2 domain-containing protein tyrosine phosphatase 1/2, and Grab2 through its phosphorylated tyrosine residues. Mutational analysis demonstrated that each tyrosine residue of K1 ITAM contributed to the interactions with cellular signaling proteins in distinctive ways. Consequently, these interactions led to the marked augmentation of cellular signal transduction activity, evidenced by the increase of cellular tyrosine phosphorylation and intracellular calcium mobilization, the activation of NF-AT and AP-1 transcription factor activities, and the production of inflammatory cytokines. These results demonstrate that KSHV K1 effectively recruits a set of cellular SH2-containing signaling molecules to form the K1 signalosome, which elicits downstream signal transduction and induces inflammatory cytokine production.