© 2017 American Society for Microbiology. All Rights Reserved. Locally concentrated nuclear factors ensure efficient binding to DNA templates, facilitating RNA polymerase II recruitment and frequent reutilization of stable preinitiation complexes. We have uncovered a mechanism for effective viral transcription by focal assembly of RNA polymerase II around Kaposi's sarcomaassociated herpesvirus (KSHV) genomes in the host cell nucleus. Using immunofluorescence labeling of latent nuclear antigen (LANA) protein, together with fluorescence in situ RNA hybridization (RNA-FISH) of the intron region of immediate early transcripts, we visualized active transcription of viral genomes in naturally infected cells. At the single-cell level, we found that not all episomes were uniformly transcribed following reactivation stimuli. However, those episomes that were being transcribed would spontaneously aggregate to form transcriptional "factories," which recruited a significant fraction of cellular RNA polymerase II. Focal assembly of "viral transcriptional factories" decreased the pool of cellular RNA polymerase II available for cellular gene transcription, which consequently impaired cellular gene expression globally, with the exception of selected ones. The viral transcriptional factories localized with replicating viral genomic DNAs. The observed colocalization of viral transcriptional factories with replicating viral genomic DNA suggests that KSHV assembles an "all-in-one" factory for both gene transcription and DNA replication. We propose that the assembly of RNA polymerase II around viral episomes in the nucleus may be a previously unexplored aspect of KSHV gene regulation by confiscation of a limited supply of RNA polymerase II in infected cells.