During the ongoing virus-host arms race, viruses have evolved numerous immune subversion strategies aimed at the production of type I interferons (IFNs). This focus on IFN evasion highlights the essentiality of these cytokines in controlling viral infections. Apoptotic caspases have recently emerged as important regulators of type I IFN signaling in both non-infectious contexts and during viral infection. Surprisingly, they promote viral immune evasion despite being widely considered antiviral from triggering cell death. Indeed, we previously discovered that the AIDS-associated oncogenic gammaherpesvirus Kaposi's sarcoma-associated herpesvirus (KSHV) exploits caspase-8 activity to suppress the antiviral type I IFN response and promote viral replication. However, the mechanisms of this novel viral immune evasion strategy are poorly understood, particularly how caspase-8 antagonizes IFN signaling. Here we show that caspase activity inhibits the DNA sensor cGAS during KSHV lytic replication to block IFN induction. Furthermore, we use single-cell RNA-sequencing to reveal that the potent antiviral state conferred upon caspase inhibition is mediated by an exceptionally small percentage of infected cells expressing IFN-β, thus uncovering further complexity of IFN regulation during viral infection. Collectively, these results provide insight into multiple levels of type I IFN regulation by the cell and the way in which viruses co-opt them for immune evasion. Unraveling these mechanisms can inform targeted therapeutic strategies for viral infections and reveal cellular mechanisms of regulating interferon signaling in the context of cancer and chronic inflammatory diseases.