Circular RNAs (circRNAs) are novel single-stranded noncoding RNAs that can decoy other RNAs to inhibit their functions. Kaposi’s sarcoma (KS), caused by oncogenic Kaposi’s sarcoma-associated herpesvirus (KSHV), is a highly angiogenic and invasive vascular tumor of endothelial origin commonly found in AIDS patients. We have recently shown that KSHV-encoded viral interferon regulatory factor 1 (vIRF1) induces cell invasion, angiogenesis and cellular transformation; however, the role of circRNAs is largely unknown in the context of KSHV vIRF1. Herein, transcriptome analysis identified 22 differentially expressed cellular circRNAs regulated by vIRF1 in an endothelial cell line. Among them, circARFGEF1 was the highest upregulated circRNA. Mechanistically, vIRF1 induced circARFGEF1 transcription by binding to transcription factor lymphoid enhancer binding factor 1 (Lef1). Importantly, upregulation of circARFGEF1 was required for vIRF1-induced cell motility, proliferation and in vivo angiogenesis. circARFGEF1 functioned as a competing endogenous RNAs (ceRNAs) by binding to and inducing degradation of miR-125a-3p. Mass spectrometry analysis demonstrated that glutaredoxin 3 (GLRX3) was a direct target of miR-125a-3p. Knockdown of GLRX3 impaired cell motility, proliferation and angiogenesis induced by vIRF1. Taken together, vIRF1 transcriptionally activates circARFGEF1, potentially by binding to Lef1, to promote cell oncogenic phenotypes via inhibiting miR-125a-3p and inducing GLRX3. These findings define a novel mechanism responsible for vIRF1-induced oncogenesis and establish the scientific basis for targeting these molecules for treating KSHV-associated cancers.