Kaposi's sarcoma-associated herpesvirus (KSHV) causes Kaposi's sarcoma, primary effusion lymphoma (PEL), and multicentric Castleman disease. Although capsid formation and maturation in the alpha-herpesvirus herpes simplex virus 1 are well understood, these processes in KSHV remain unknown. The KSHV ORF7, encoding the viral terminase (DNA cleavage and packaging protein), is thought to contribute to capsid formation; however, functional information is lacking. Here, we investigated the role of ORF7 during KSHV lytic replication by generating two types of ORF7 knock-out (KO) mutants (frameshift-induced and stop codon-induced ORF7 deficiency), KSHV BAC16, and its revertants. The results revealed that both ORF7-KO KSHVs showed significantly reduced viral production but there was no effect on lytic gene expression and viral genome replication. Complementation assays showed virus production from cells harboring ORF7-KO KSHV could be recovered by ORF7 overexpression. Additionally, exogenously expressed ORF7 partially induced nuclear relocalization of the other terminase components, ORF29 and ORF67.5. ORF7 interacted with both ORF29 and ORF67.5, whereas ORF29 and ORF67.5 failed to interact with each other, suggesting that ORF7 functions as a hub molecule in the KSHV terminase complex for interactions between ORF29 and ORF67.5. These findings indicate that ORF7 plays a key role in viral replication, as a component of terminase.