The major transmission route for Kaposi's sarcoma-associated herpesvirus (KSHV) infection is the oral cavity through saliva. Kaposi's sarcoma (KS) frequently occurs in the oral cavity in HIV-positive individuals and is often the first presenting sign of AIDS. However, the oral target cells for KSHV infection and the cellular origin of KS remain unknown. Here we present clinical and experimental evidences that KS spindle cells may originate from virally modified oral mesenchymal stem cells (MSC). AIDS-KS spindle cells expressed neuroectodermal stem cell marker (Nestin) and oral MSC marker CD29, suggesting an oral/craniofacial MSC lineage of AIDS-associated KS. Furthermore, oral MSC were highly susceptible to KSHV infection, and infection promoted multi-lineage differentiation and mesenchymal-to-endothelial transition (MEndT). KSHV infection of oral MSCs resulted in expression of a large number of cytokines, a characteristic of KS, and upregulation of KS signature and MEndT-associated genes. These results suggest that KS may originate from pluripotent MSC and KSHV infection transforms MSC to KS-like cells through MEndT.