Human herpesvirus 8 (HHV8) infects Kaposi’s sarcoma (KS) spindle cells in situ, as well as the lesional endothelial cells considered to be spindle cell precursors. The HHV8 genome contains several oncogenes, suggesting that infection of endothelial and spindle cells could induce cellular transformation and tumorigenesis and promote the formation of KS lesions. To investigate the potential of HHV8 infection of endothelial cells to contribute to the development of KS, we have developed an in vitro model utilizing dermal microvascular endothelial cells that support significant HHV8 infection. In contrast to existing in vitro systems used to study HHV8 pathogenesis, the majority of dermal endothelial cells are infected with HHV8 and the viral genome is maintained indefinitely. Infection is predominantly latent, with a small percentage of cells supporting lytic replication, and latency is responsive to lytic induction stimuli. Infected endothelial cells develop a spindle shape resembling that of KS lesional cells and show characteristics of a transformed phenotype, including loss of contact inhibition and acquisition of anchorage-independent growth. These results describe a relevant model system in which to study virus-host interactions in vitro and demonstrate the ability of HHV8 to induce phenotypic changes in infected endothelial cells that resemble characteristics of KS spindle cells in vivo. Thus, our results are consistent with a direct role for HHV8 in the pathogenesis of KS.