HSV type 1 (HSV-1) is one of the leading etiologies of sporadic viral encephalitis. Early antiviral intervention is crucial to the survival of herpes simplex encephalitis patients; however, many survivors suffer from long-term neurologic deficits. It is currently understood that HSV-1 establishes a latent infection within sensory peripheral neurons throughout the life of the host. However, the tissue residence of latent virus, other than in sensory neurons, and the potential pathogenic consequences of latency remain enigmatic. In the current study, we characterized the lytic and latent infection of HSV-1 in the CNS in comparison with the peripheral nervous system following ocular infection in mice. We used RT-PCR to detect latency-associated transcripts and HSV-1 lytic cycle genes within the brain stem, the ependyma (EP), containing the limbic and cortical areas, which also harbor neural progenitor cells, in comparison with the trigeminal ganglia. Unexpectedly, HSV-1 lytic genes, usually identified during acute infection, are uniquely expressed in the EP 60 d postinfection when animals are no longer suffering from encephalitis. An inflammatory response was also mounted in the EP by the maintenance of resident memory T cells. However, EP T cells were incapable of controlling HSV-1 infection ex vivo and secreted less IFN-γ, which correlated with expression of a variety of exhaustion-related inhibitory markers. Collectively, our data suggest that the persistent viral lytic gene expression during latency is the cause of the chronic inflammatory response leading to the exhaustion of the resident T cells in the EP.