Two small fragments of a novel human gammaherpesvirus genome known as Kaposi's sarcoma (KS)-associated herpesvirus or human herpesvirus 8 (HHV-8) have been shown to be present in virtually all AIDS and non-AIDS KS lesions, as well as in body cavity-based lymphomas (BCBL) and in multicentric Castleman's disease. We have extended those studies by identifying and sequencing a third fragment of HHV-8 DNA encoding a viral thymidylate synthetase (TS) gene. Use of this viral TS fragment as a probe led to the identification and mapping of a cluster of overlapping phage lambda clones from a BCBL tumor DNA genomic library that spanned 48 kb on the left-hand side of the HHV-8 genome between the equivalents of open reading frame 6 (ORF6) and ORF31 of herpesvirus saimiri (HVS). DNA sequencing of a 17-kb segment encompassing a gammaherpesvirus divergent locus (DL-B) between ORF11 and ORF17 revealed the presence of nine viral ORFs with predicted gene products related to cellular proteins. These include the complete TS gene and a dihydrofolate reductase (DHFR) gene, four novel cytokine genes (encoding viral interleukin-6, viral MIP-1A, viral MIP-1B, and BCK) that have not previously been found to be encoded by a virus, and a bcl-2 homolog. This region in HHV-8 also contains the T1.1 abundant lytic cycle nuclear RNA gene and encompasses two genes (or exons) encoding proteins with C4HC3 zinc finger domains of the PHD/leukemia-associated protein subtype. The latter are related to the spliced immediate-early IE1 protein of the gamma-2 class herpesvirus bovine herpesvirus type 4 and a similar motif found in HVS ORF12. Although genes for TS and DHFR enzymes are also encoded by HVS (ORF70 and ORF2), both occur at different genomic loci than in HHV-8, and the HHV-8 DHFR protein is much farther diverged from human DHFR than is the HVS version, implying that they were probably acquired as host cell cDNAs by independent evolutionary events. Transcripts from the IE1-A, IE1-B, DHFR, and MIP-1B genes were all detected by Northern blot hybridization analysis in a BCBL cell line at 12 h after induction with butyrate but were not present before induction, indicating that these are all primarily lytic cycle genes. We conclude that the DL-B locus of gammaherpesviruses displays considerably more variability that previously appreciated and that expression of many of these genes is likely to have important implications for HHV-8 biology and therapy.