Kaposi's sarcoma-associated herpesvirus (KSHV) establishes life-long infection by evading clearance by the host immune system. In de novo infection and lytic replication, KSHV escapes cytotoxic T cells and NK cells through downregulation of MHC class-I and ICAM-1 molecules and associated antigens involved in forming and sustaining the immunological synapse. However, the efficacy of such mechanisms in the context of the predominantly latent KSHV infection reported in Kaposi's sarcoma (KS) lesions is unclear. Using primary dermal fibroblasts in a novel in vitro model of chronic latent KSHV infection, we generated target cells with viral loads similar to those in spindle cells extracted from KS lesions. We show that latently KSHV-infected fibroblasts had normal levels of MHC-class I, ICAM-1, HLA-E and NKG2D ligand expression, were resistant to NK-cell natural cytotoxicity and were highly susceptible to killing by cytokine-activated immunocompetent NK cells. KSHV-infected fibroblasts expressed normal levels of IFN-γR1 and responded to exogenous IFN-γ by upregulating MHC class I, ICAM-1 and HLA-E and resisting activated NK-cell killing. These data demonstrate that physiologically relevant levels of latent KSHV infection in primary cells cause limited activation of resting NK cells and confer little specific resistance to control by activated NK cells.