Kaposi's sarcoma-associated herpesvirus (KSHV) is the cause of Kaposi's sarcoma and body cavity lymphoma. In cell culture, KSHV results in a latent infection, and lytic reactivation is usually induced with the expression of K-Rta or by treatment with phorbol 12-myristate 13-acetate (TPA) and/or n-butyrate. Lytic infection is marked by the activation of the entire viral genomic transcription cascade and the production of infectious virus. KSHV-infected cells express a highly abundant, long, noncoding transcript referred to as polyadenylated nuclear RNA (PAN RNA). PAN RNA interacts with specific demethylases and physically binds to the KSHV genome to mediate activation of viral gene expression. A recombinant BACmid lacking the PAN RNA locus fails to express K-Rta and does not produce virus. We now show that the lack of PAN RNA expression results in the failure of the initiation of the entire KSHV transcription program. In addition to previous findings of an interaction with demethylases, we show that PAN RNA binds to protein components of Polycomb repression complex 2 (PRC2). RNA-Seq analysis using cell lines that express PAN RNA shows that transcription involving the expression of proteins involved in cell cycle, immune response, and inflammation is dysregulated. Expression of PAN RNA in various cell types results in an enhanced growth phenotype, higher cell densities, and increased survival compared to control cells. Also, PAN RNA expression mediates a decrease in the production of inflammatory cytokines. These data support a role for PAN RNA as a major global regulator of viral and cellular gene expression.