The contribution of innate immunity to immunosurveillance of the oncogenic Human Herpes Virus 8 (HHV8) has not been studied in depth. We investigated NK cell phenotype and function in 70 HHV8-infected subjects, either asymptomatic carriers or having developed Kaposi's sarcoma (KS). Our results revealed substantial alterations of the NK cell receptor repertoire in healthy HHV8 carriers, with reduced expression of NKp30, NKp46 and CD161 receptors. In addition, down-modulation of the activating NKG2D receptor, associated with impaired NK-cell lytic capacity, was observed in patients with active KS. Resolution of KS after treatment was accompanied with restoration of NKG2D levels and NK cell activity. HHV8-latently infected endothelial cells overexpressed ligands of several NK cell receptors, including NKG2D ligands. The strong expression of NKG2D ligands by tumor cells was confirmed in situ by immunohistochemical staining of KS biopsies. However, no tumor-infiltrating NK cells were detected, suggesting a defect in NK cell homing or survival in the KS microenvironment. Among the known KS-derived immunoregulatory factors, we identified prostaglandin E2 (PGE2) as a critical element responsible for the down-modulation of NKG2D expression on resting NK cells. Moreover, PGE2 prevented up-regulation of the NKG2D and NKp30 receptors on IL-15-activated NK cells, and inhibited the IL-15-induced proliferation and survival of NK cells. Altogether, our observations are consistent with distinct immunoevasion mechanisms that allow HHV8 to escape NK cell responses stepwise, first at early stages of infection to facilitate the maintenance of viral latency, and later to promote tumor cell growth through suppression of NKG2D-mediated functions. Importantly, our results provide additional support to the use of PGE2 inhibitors as an attractive approach to treat aggressive KS, as they could restore activation and survival of tumoricidal NK cells.