Infections with DNA tumor viruses, including members of the polyomavirus family, often result in tumor formation in immune-deficient hosts. The complex control involved in antiviral and antitumor immune responses during these infections can be studied in murine polyomavirus (PyV)-infected mice as a model. We found that NK cells efficiently kill cells derived from PyV-induced salivary gland tumors in vitro in an NKG2D (effector cell)-RAE-1 (target cell)-dependent manner; but in T cell-deficient mice, NK cells only delay but do not prevent the development of PyV-induced tumors. In this article, we show that the PyV-induced tumors have infiltrating functional NK cells. The freshly removed tumors, however, lack surface RAE-1 expression, and the tumor tissues produce soluble factors that downregulate RAE-1. These factors include the proinflammatory cytokines IL-1alpha, IL-1beta, IL-33, and TNF. Each of these cytokines downregulates RAE-1 expression and susceptibility to NK cell-mediated cytotoxicity. CD11b(+)F4/80(+) macrophages infiltrating the PyV-induced tumors produce high amounts of IL-1beta and TNF. Thus, our data suggest a new mechanism whereby inflammatory cytokines generated in the tumor environment lead to evasion of NK cell-mediated control of virus-induced tumors.