ABSTRACT IFI16 (interferon-γ-inducible protein 16) is an innate-immune DNA sensor that detects viral dsDNA in the nucleus. It also functions as an antiviral restriction factor, playing a crucial role in regulating the latency/lytic balance of several herpesviruses, including Kaposi’s sarcoma-associated herpesvirus (KSHV). We previously demonstrated that IFI16 achieves this by regulating the deposition of H3K9me3 marks on the KSHV genome. Here, we explored whether IFI16 impacts the KSHV latency/lytic balance through additional mechanisms. Our analysis of the IFI16 interactome revealed that IFI16 binds to the class-I HDACs, HDAC1 and HDAC2, and recruits them to the KSHV major latency protein, latency-associated nuclear antigen (LANA). Previous reports have suggested that LANA undergoes lysine acetylation through unknown mechanisms, which results in the loss of its ability to bind to the KSHV transactivator protein (RTA) promoter. However, how the LANA acetylation-deacetylation cycle is orchestrated and what effect this has on KSHV gene expression remains unknown. Here, we demonstrate that LANA, by default, undergoes post-translational acetylation, and during latency, IFI16 interacts with this acetylated LANA and recruits HDAC1/2 to it. This keeps LANA in a deacetylated form, competent in binding and repressing lytic promoters. However, during lytic reactivation, IFI16 is degraded via the proteasomal pathway, leading to the accumulation of acetylated LANA, which cannot bind to the RTA promoter. This results in the de-repression of the RTA and, subsequently, other lytic promoters, driving reactivation. These findings shed new light on the role of IFI16 in KSHV latency and suggest that KSHV utilizes the cellular IFI16-HDAC1/2 interaction to facilitate its latency. IMPORTANCE Kaposi’s sarcoma-associated herpesvirus (KSHV) is an oncogenic γ-herpesviruses etiologically associated with several human malignancies, including Kaposi’s sarcoma, primary effusion B-cell lymphoma, and multicentric Castleman’s disease. Understanding the molecular mechanisms governing the establishment and maintenance of latency in γ-herpesviruses is crucial because latency plays a pivotal role in oncogenesis and disease manifestation post-infection. Here, we have elucidated a new mechanism by which IFI16, a previously discovered antiviral restriction factor, is hijacked by KSHV to recruit class-I HDACs on latency-associated nuclear antigen (LANA), resulting in the latter’s deacetylation. The acetylation status of LANA is critical for KSHV latency because it governs LANA’s binding to the KSHV replication and transcription activator (RTA) promoter, an immediate-early gene crucial for lytic reactivation. Depletion of IFI16 results in the accumulation of acetylated LANA, which is incapable of maintaining latency. These newly discovered interactions between IFI16 and LANA and between IFI16 and HDAC1/2 enhance our understanding of KSHV latency regulations.