Replication and transcription activator (RTA), an immediate-early gene, is a key molecular switch to evoke lytic replication of gammaherpesviruses. Open reading frame 49 (ORF49) is conserved among gammaherpesviruses and shown to cooperate with RTA in regulating virus lytic replication. Here we show a molecular mechanism and in vivo functions of murine gammaherpesvirus 68 (MHV-68 or ␥HV-68) ORF49. MHV-68 ORF49 was transcribed and translated as a late gene. The ORF49 protein was associated with a virion, interacting with the ORF64 large tegument protein and the ORF25 capsid protein. Moreover, ORF49 directly bound to RTA and its negative cellular regulator, poly(ADP-ribose) polymerase-1 (PARP-1), and disrupted the interactions of RTA and PARP-1. Productive replication of an ORF49-deficient mutant virus (49S) was attenuated in vivo as well as in vitro. Likewise, latent infection was also impaired in the spleen of 49S-infected mice. Taken together, our results suggest that the virion-associated ORF49 protein may promote virus replication both in vitro and in vivo by providing an optimal environment in the early phase of virus infection as a derepressor of RTA.