The oncogenic human gammaherpesvirus Kaposi's sarcoma-associated herpesvirus (KSHV) expresses 12 viral microRNAs (miRNAs) in latently infected cells. Here, we report that cellular mRNAs encoding the cellular cyclin-dependent kinase inhibitor p21, a key inducer of cell cycle arrest, are direct targets for KSHV miR-K1. Ectopically expressed KSHV miR-K1 specifically inhibited the expression of endogenous p21 in KSHV-negative cells and strongly attenuated the cell cycle arrest that normally occurs upon p53 activation, yet miR-K1 did not prevent the induction of other p53-responsive genes. Stable knockdown of miR-K1 in latently KSHV-infected human primary effusion lymphoma (PEL) B cells revealed a derepression of p21 expression and enhanced cell cycle arrest following activation of p53. Our data demonstrate that miR-K1 represses the expression of p21, a protein with known tumor suppressor functions, and suggest that this KSHV miRNA is likely to contribute to the oncogenic potential of this opportunistic viral pathogen.