Kaposi's sarcoma (KS), a multifocal vascular neoplasm, is the most frequent cancer arising in HIV-infected individuals and in immunosuppressed patients. KS is caused by the KS-associated herpesvirus (KSHV). A single lytic gene of KSHV genes, G protein-coupled receptor (vGPCR), is sufficient to induce Kaposi-like sarcomas in mice. This vGPCR has been shown to promote the activation of PI3K/Akt, involved in transformation of endothelial cells. However, the Akt downstream effectors required for vGPCR to promote Kaposi's sarcomagenesis are still unknown. Here, we have found that vGPCR induces the phosphorylation and inactivation of tuberin (TSC2), promoting the activation of mTOR. Moreover, over-activation of TSC/mTOR is sufficient to render endothelial cells oncogenic. Treatment with rapamycin (mTOR inhibitor) efficiently prevented the growth of vGPCR tumors in vivo. Collectively, these results implicate the mTOR signaling route in Kaposi's sarcomagenesis and provide experimental evidence demonstrating that drugs targeting mTOR may represent an effective mechanism-based therapy for the treatment of KS. We have observed that, although rapamycin has been shown to be an efficient therapy for patients with iatrogenic or classic KS, the activity of Akt was transiently increased in vGPCR-expressing endothelial cells (EC-vGPCR). We therefore investigated the efficacy of PI-103, a novel dual PI3Kα/mTOR inhibitor, in preventing vGPCR transformation. PI-103 treatment effectively and independently blocked the activation of both PI3K and mTOR in EC-vGPCR. This resulted in the effective inhibition of endothelial cell proliferation and survival in vitro, and tumor growth in vivo, suggesting that PI-103 may be an effective therapeutic option for the treatment of KS. We also found that the angiogenic growth factors secreted by EC-vGPCR can induce the activity of mTOR in endothelial cells, suggesting that vGPCR regulates mTOR through both direct and indirect (paracrine) mechanisms. In addition, we found that the effect of rapamycin on vGPCR sarcomagenesis is not dependent on the direct activation of mTOR in vGPCR-expressing cells. Rather, the profound sensitivity of these tumors to rapamycin treatment may be due, in part, to the inhibition of the paracrine activation of mTOR in neighboring (bystander) cells by the angiogenic factors elaborated by EC-vGPCR. Collectively, these results support the key role of paracrine transforming mechanisms in vGPCR sarcomagenesis.