Primary effusion lymphoma (PEL) is a rare B-cell lymphoma caused by Kaposi's sarcoma-associated herpesvirus (KSHV). PEL is poorly responsive to standard cytotoxic chemotherapy and portends a poor survival. Consequently, new effective treatment options are urgently needed. It is known that KSHV encodes two lytic genes, ORF36 (phosphotransferase) and KSHV ORF21 (thymidine kinase), which can phosphorylate ganciclovir and azidothymidine, respectively. Here, we have explored whether these genes can be used as therapeutic targets for PEL. PEL arises in pleural spaces and other effusions that provide a hypoxic environment. Based on Northern blot analysis, exposure of PEL cells to hypoxia up-regulated the expression of both ORF36 and ORF21. Using a newly developed nonradioactive reverse-phase high-performance liquid chromatography/mass spectrometry method to separate and quantify the phosphorylated forms of ganciclovir and azidothymidine, we found that PEL cells exposed to hypoxia produced increased amounts of the toxic triphosphates of these drugs. Moreover, we found that hypoxia increased the cell toxicity of ganciclovir and azidothymidine in PEL cells but had no significant effect on the herpesvirus-negative cell line CA46. These findings may have clinical applicability in the development of effective therapies for PEL or other KSHV-related malignancies. [Cancer Res 2007;67(14):7003–10]