Kaposi's sarcoma herpesvirus (KSHV) causes Kaposi's sarcoma and certain lymphoproliferative malignancies. Latent infection is established in the majority of tumor cells, whereas lytic replication is reactivated in a small fraction of cells, which is important for both virus spread and disease progression. A siRNA screen for novel regulators of KSHV reactivation identified the E3 ubiquitin ligase MDM2 as a negative regulator of viral reactivation. Depletion of MDM2, a repressor of p53, favored efficient activation of the viral lytic transcription program and viral reactivation. During lytic replication cells activated a p53 response, accumulated DNA damage and arrested at G2-phase. Depletion of p21, a p53 target gene, restored cell cycle progression and thereby impaired the virus reactivation cascade delaying the onset of virus replication induced cytopathic effect. Herpesviruses are known to reactivate in response to different kinds of stress, and our study now highlights the molecular events in the stressed host cell that KSHV has evolved to utilize to ensure efficient viral lytic replication.