Kaposi's sarcoma (KS) is the major AIDS-associated malignancy. It is characterized by the proliferation of spindle cells, inflammatory infiltrate, and aberrant angiogenesis caused by Kaposi's sarcoma herpesvirus (KSHV) infection. Small GTPase Rac1, an inflammatory signaling mediator triggering reactive oxygen species (ROS) production by NADPH-oxidases, is implicated in carcinogenesis and tumor angiogenesis. Here, we show that expression of a constitutively active Rac1 (RacCA) driven by the alpha-smooth muscle actin promoter in transgenic mice is sufficient to cause KS-like tumors through mechanisms involving ROS-driven proliferation, up-regulation of AKT signaling, and hypoxia-inducible factor 1-alpha-related angiogenesis. RacCA-induced tumors expressed KS phenotypic markers; displayed remarkable transcriptome overlap with KS lesions; and were, like KS, associated with male gender. The ROS scavenging agent N-acetyl-cysteine inhibited angiogenesis and completely abrogated transgenic RacCA tumor formation, indicating a causal role of ROS in tumorigenesis. Consistent with a pathogenic role in KS, immunohistochemical analysis revealed that Rac1 is overexpressed in KSHV(+) spindle cells of AIDS-KS biopsies. Our results demonstrate the direct oncogenicity of Rac1 and ROS and their contribution to a KS-like malignant phenotype, further underscoring the carcinogenic potential of oxidative stress in the context of chronic infection and inflammation. They define the RacCA transgenic mouse as a model suitable for studying the role of oxidative stress in the pathogenesis and therapy of KS, with relevance to other inflammation-related malignancies. Our findings suggest host and viral genes triggering Rac1 or ROS production as key determinants of KS onset and potential KS chemopreventive or therapeutic targets.