During the lytic phase of infection, the gamma herpesvirus Kaposi's Sarcoma-Associated Herpesvirus (KSHV) expresses a highly abundant, 1.1 kb nuclear noncoding RNA of unknown function. We observe that this polyadenylated nuclear (PAN) RNA avidly binds host poly(A)-binding protein C1 (PABPC1), which normally functions in the cytoplasm to bind the poly(A) tails of mRNAs, regulating mRNA stability and translation efficiency. During the lytic phase of KSHV infection, PABPC1 is re-localized to the nucleus as a consequence of expression of the viral shutoff exonuclease (SOX) protein; SOX also mediates the host shutoff effect in which host mRNAs are downregulated while viral mRNAs are selectively expressed. We show that whereas PAN RNA is not required for the host shutoff effect or for PABPC1 re-localization, SOX strongly upregulates the levels of PAN RNA in transient transfection experiments. This upregulation is destroyed by the same SOX mutation that ablates the host shutoff effect and PABPC1 nuclear re-localization or by removal of the poly(A) tail of PAN. In cells induced into the KSHV lytic phase, depletion of PAN RNA using RNase H-targeting antisense oligonucleotides reveals that it is necessary for the production of late viral proteins from mRNAs that are themselves polyadenylated. Our results add to the repertoire of functions ascribed to long noncoding RNAs and suggest a mechanism of action for nuclear noncoding RNAs in gamma herpesvirus infection.