We have characterized a novel, captured and fully functional viral interleukin (IL)-10 homologue ((OvHV)IL-10) from the gammaherpesvirus ovine herpesvirus 2. Unlike IL-10 homologues from other gammaherpesviruses, the (OvHV)IL-10 peptide sequence was highly divergent from that of the host species. The (OvHV)IL-10 gene is unique amongst virus captured genes in that it has precisely retained the original cellular exon structure, having five exons of similar sizes to the cellular counterparts. However, the sizes of the introns are dramatically reduced. The (OvHV)IL-10 protein was shown to be a non-glycosylated, secreted protein of M(r) 21 000 with a signal peptidase cleavage site between amino acids 26 and 27 of the nascent peptide. Functional assays showed that (OvHV)IL-10, in a similar way to ovine IL-10, stimulated mast cell proliferation and inhibited macrophage inflammatory chemokine production. This is the first example of a captured herpesvirus gene retaining the full cellular gene structure.