Polyomaviruses are small, circular dsDNA viruses that can cause cancer. Alternative splicing of polyomavirus early transcripts generates large and small tumor antigens (LT, ST) that play essential roles in viral replication and tumorigenesis. Some polyomaviruses also express middle tumor antigens (MTs) or Alternate LT ORFs (ALTOs), which are evolutionarily related but have distinct gene structures. MTs are a splice variant of the early transcript whereas ALTOs are overprinted on the second exon of the LT transcript in an alternate reading frame and are translated via an alternative start codon. Merkel cell polyomavirus (MCPyV), the only human polyomavirus that causes cancer, encodes an ALTO but its role in the viral lifecycle and tumorigenesis has remained elusive. Here, we show MCPyV ALTO acts as a tumor suppressor and is silenced in Merkel cell carcinoma (MCC). Rescuing ALTO in MCC cells induces growth arrest and activates NF-κB signaling. ALTO activates NF-κB by binding SQSTM1 and TRAF2&3 via two N-Terminal Activating Regions (NTAR1+2), resembling Epstein-Barr virus (EBV) Latent Membrane Protein 1 (LMP1).. Following activation, NF-κB dimers bind the MCPyV non-coding control region (NCCR) and downregulate early transcription. Beyond MCPyV, NTAR motifs are conserved in other polyomavirus ALTOs, which activate NF-κB signaling, but are lacking in MTs that do not. Furthermore, polyomavirus ALTOs downregulate their respective viral early transcription in an NF-κB and NTAR dependent manner. Our findings suggest that ALTOs evolved to suppress viral replication and promote viral latency and that MCPyV ALTO must be silenced for MCC to develop.