Establishment of latent infection and reactivation from latency are critical aspects of herpesvirus infection and pathogenesis. Interfering with either of these steps in the herpesvirus life cycle may offer a novel strategy for controlling herpesvirus infection and associated disease pathogenesis. Prior studies show that mice deficient in gamma interferon (IFN-gamma) or the IFN-gamma receptor have elevated numbers of cells reactivating from murine gammaherpesvirus 68 (gammaHV68) latency, produce infectious virus after the establishment of latency, and develop large-vessel vasculitis. Here, we demonstrate that IFN-gamma is a powerful inhibitor of reactivation of gammaHV68 from latency in tissue culture. In vivo, IFN-gamma controls viral gene expression during latency. Importantly, depletion of IFN-gamma in latently infected mice results in an increased frequency of cells reactivating virus. This demonstrates that IFN-gamma is important for immune surveillance that limits reactivation of gammaHV68 from latency.