PCNA is monoubiquitinated in response to DNA damage and fork stalling and then initiates recruitment of specialized polymerases in the DNA damage tolerance pathway, translesion synthesis (TLS). Since PCNA is reported to associate with Epstein-Barr virus (EBV) DNA during its replication, we investigated whether the EBV deubiquitinating (DUB) enzyme encoded by BPLF1 targets ubiquitinated PCNA and disrupts TLS. An N-terminal BPLF1 fragment (a BPLF1 construct containing the first 246 amino acids [BPLF1 1-246]) associated with PCNA and attenuated its ubiquitination in response to fork-stalling agents UV and hydroxyurea in cultured cells. Moreover, monoubiquitinated PCNA was deubiquitinated after incubation with purified BPLF1 1-246 in vitro. BPLF1 1-246 dysregulated TLS by reducing recruitment of the specialized repair polymerase polymerase η (Polη) to the detergent-resistant chromatin compartment and virtually abolished localization of Polη to nuclear repair foci, both hallmarks of TLS. Expression of BPLF1 1-246 decreased viability of UV-treated cells and led to cell death, presumably through deubiquitination of PCNA and the inability to repair damaged DNA. Importantly, deubiquitination of PCNA could be detected endogenously in EBV-infected cells in comparison with samples expressing short hairpin RNA (shRNA) against BPLF1. Further, the specificity of the interaction between BPLF1 and PCNA was dependent upon a PCNA-interacting peptide (PIP) domain within the N-terminal region of BPLF1. Both DUB activity and PIP sequence are conserved in the members of the family Herpesviridae. Thus, deubiquitination of PCNA, normally deubiquitinated by cellular USP1, by the viral DUB can disrupt repair of DNA damage by compromising recruitment of TLS polymerase to stalled replication forks. PCNA is the first cellular target identified for BPLF1 and its deubiquitinating activity.