Little is known about herpesvirus modulation of T cell activation in latently infected individuals or the implications of such for chronic immune disorders. Murine gammaherpesvirus 68 (MHV68) elicits persistent activation of CD8⁺ T cells bearing a Vβ4⁺ T cell receptor (TCR) by a completely unknown mechanism. We show that a novel MHV68 protein encoded by the M1 gene is responsible for Vβ4⁺ CD8⁺ T cell stimulation in a manner reminiscent of a viral superantigen. During infection, M1 expression induces a Vβ4⁺ effector T cell response that resists functional exhaustion and appears to suppress virus reactivation from peritoneal cells by means of long-term interferon-γ (IFNγ) production. Mice lacking an IFNγ receptor (IFNγR^−/−) fail to control MHV68 replication, and Vβ4⁺ and CD8⁺ T cell activation by M1 instead contributes to severe inflammation and multiorgan fibrotic disease. Thus, M1 manipulates the host CD8⁺ T cell response in a manner that facilitates latent infection in an immunocompetent setting, but promotes disease during a dysregulated immune response. Identification of a viral pathogenecity determinant with superantigen-like activity for CD8⁺ T cells broadens the known repertoire of viral immunomodulatory molecules, and its function illustrates the delicate balance achieved between persistent viruses and the host immune response.