The gammaherpesviruses (γHVs) establish a lifelong infection in their hosts, with the cellular outcome of infection intimately regulated by target cell type. Murine gammaherpesvirus 68 (MHV68), a small animal model of γHV infection, infects macrophages in vivo, resulting in a range of outcomes, from lytic replication to latent infection. Here, we have further investigated the nature of MHV68 macrophage infection using reductionist and primary in vivo infection studies. While MHV68 readily infected the J774 macrophage cell line, viral gene expression and replication were significantly impaired relative to a fully permissive fibroblast cell line. Lytic replication only occurred in a small subset of MHV68-infected J774 cells, despite the fact that these cells were fully competent to support lytic replication following pre-treatment with interleukin-4, a known potentiator of replication in macrophages. In parallel, we harvested virally-infected macrophages at 16 hours after MHV68 infectionin vivoand analyzed gene expression by single cell RNA-sequencing. Among virally infected macrophages, only rare (0.25%) cells had lytic cycle gene expression, characterized by detection of multiple lytic cycle RNAs. In contrast, ∼50% of virally-infected macrophages were characterized by expression of ORF75A, ORF75B and/or ORF75C, in the absence of other detectable viral RNAs. Selective transcription of the ORF75 locus also occurred in MHV68-infected J774 cells. In total, these studies indicate that MHV68 efficiently infects macrophages, with the majority of cells characterized by an atypical state of restricted viral transcription, and only rare cells undergoing lytic replication.ImportanceThe human gammaherpesviruses Epstein-Barr virus and Kaposi’s sarcoma associated herpesvirus are DNA viruses that cause lifelong infection and are associated with multiple diseases, especially in immunocompromised individuals. Murine gammaherpesvirus 68 (MHV68) is a powerful mouse model that permits close examination of these viruses. Previous studies of MHV68 identified that macrophages are an important in vivo target of infection; how infection within these cells is regulated remains incompletely understood. Here, we demonstrate that MHV68 infection of macrophages is characterized by two divergent outcomes across a population of infected cells: while a small subset of cells undergo lytic replication, to make new virus progeny, the majority of cells are characterized by an atypical, restricted form of infection characterized by a distinct viral gene transcription program not previously reported. These studies highlight important cell-type specific outcomes of gammaherpesvirus infection and identify a potential alternate program by which these viruses usurp macrophages.