Tumor associated macrophages (TAMs) promote angiogenesis, tumor invasion and metastasis, and suppression of anti-tumor immunity. These myeloid cells originate from monocytes, which differentiate into TAMs upon exposure to the local tumor microenvironment. We previously reported that Kaposi's sarcoma-associated herpes virus (KSHV) infection of endothelial cells induces the cytokine angiopoietin-2 (Ang-2) to promote migration of monocytes into tumors. Here we report that KSHV infection of endothelial cells induces additional cytokines including interleukin-6 (IL-6), interleukin-10 (IL-10), and interleukin-13 (IL-13) that drive monocytes to differentiate and polarize into TAMs. The KSHV-induced TAMs not only express TAM-specific markers such as CD-163 and legumain (LGMN) but also display a gene expression profile with characteristic features of viral infection. More importantly, KSHV-induced TAMs enhance tumor growth in nude mice. These results are consistent with the strong presence of TAMs in Kaposi's sarcoma (KS) tumors. Therefore, KSHV infection of endothelial cells generates a local microenvironment that not only promotes the recruitment of monocytes but also induces their differentiation and polarization into TAMs. These findings reveal a new mechanism of KSHV contribution to KS tumor development.