Murine γ-herpesvirus 68 (γHV68) infection is a new model for understanding how immunity and chronic γ-herpesvirus infection inter-relate. γHV68 is closely related to the human Epstein-Barr virus and Kaposi's sarcoma herpesvirus and is associated with tumors, vasculitis of the great elastic arteries and splenic fibrosis. Advances in the past year have provided an even stronger foundation for believing that γHV68 infection of normal and mutant mice will become the pre-eminent animal model for understanding γ-herpesvirus pathogenesis and immunity. γHV68 latency has been characterized employing new assays for quantitating cells carrying the γHV68 genome and cells that reactivate γHV68 and for detecting the presence of preformed infectious virus in tissues. These advances have fostered the first steps towards a molecular definition of γHV68 latency. It appears that γHV68 shares latency programs with human γ-herpesviruses - including the loci for gene 73, v-bcl-2 and the viral homolog of the G-protein coupled receptor. This provides candidate antigens for analysis of the role of T and B cells in regulating latency. Multiple cellular reservoirs for γHV68 latency were uncovered with the demonstration that γHV68 latently infects macrophages in addition to B cells. A critical role for B cells in regulating the nature of γHV68 latency was discovered and the mechanism was shown to be via alteration of the efficiency of reactivation. Studies of the response of CD4+ and CD8+ cells during acute and chronic γHV68 were performed. These new studies provide key building blocks for further development of this novel and interesting model system.