Kaposi's sarcoma-associated herpesvirus (KSHV) encodes 12 pre-microRNAs (pre-miRNAs). Current studies have shown that these miRNAs are involved in regulation of viral and host gene expression, implicating a role in the maintenance of viral latency and suppression of antiviral innate immunity. However, the functions of these miRNAs remain largely unknown. On the basis of the sequence homology between oncogenic miR-155 and KSHV-encoded miR-K12-11, we hypothesized that miR-K12-11 could attenuate transforming growth factor β (TGF-β) signaling, facilitating viral infection and tumorigenesis. In the present study, we demonstrated that ectopic expression of miR-K12-11 in Ramos, a TGF-β-sensitive cell line, downregulated TGF-β signaling and facilitated cell proliferation upon TGF-β treatment by directly targeting SMAD5, an important mediator in TGF-β signaling. In addition, the downregulation of SMAD5 by miR-K12-11 was further confirmed in a de novo KSHV infection system or latently infected KSHV-positive B-lymphoma cell lines. More importantly, repression of miR-K12-11 by a specific sponge inhibitor restored the expression of SMAD5 in both de novo-infected and latently infected cells. Finally, we found that restoration of SMAD5, in addition to the TGF-β type II receptor, which was epigenetically silenced by the latent viral protein latency-associated nuclear antigen, sensitized BC3 cells to the cytostatic effect of TGF-β signaling. Taken together, our findings highlight a novel mechanism in which miR-K12-11 downregulates TGF-β signaling and suggest that viral miRNAs and proteins may exert a dichotomy regulation in virus-induced oncogenesis by targeting the same signaling pathway.