Paradoxically, the thymidine kinase (TK) encoded by Kaposi sarcoma-associated herpesvirus (KSHV) is an extremely inefficient nucleoside kinase, when compared to TKs from related herpesviruses. We now show that KSHV-TK, in contrast to HSV1-TK, associates with the actin cytoskeleton and induces extensive cell contraction followed by membrane blebbing. These dramatic changes in cell morphology depend on the auto-phosphorylation of tyrosines 65, 85 and 120 in the N-terminus of KSHV-TK. Phosphorylation of tyrosines 65/85 and 120 results in an interaction with Crk family proteins and the p85 regulatory subunit of PI3-Kinase, respectively. The interaction of Crk with KSHV-TK leads to tyrosine phoshorylation of this cellular adaptor. Auto-phosphorylation of KSHV-TK also induces a loss of FAK and paxillin from focal adhesions, resulting in activation of RhoA-ROCK signalling to myosin II and cell contraction. In the absence of FAK or paxillin, KSHV-TK has no effect on focal adhesion integrity or cell morphology. Our observations demonstrate that by acting as a tyrosine kinase, KSHV-TK modulates signalling and cell morphology.