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The host immune response is a significant barrier to allogeneic transplantation and this problem affects almost all types of cell-based tissue engineered constructs. In this paper, we test whether genetically engineering human cells to express viral immunomodulatory proteins can evade the acute cellular alloimmune response. We overexpressed Kaposi Sarcoma-Associated Herpes Virus’s (KSHV) modulator of immune recognition (MIR2) protein in human monocyte-like leukemia cells (U937) using the moloney murine leukemia virus (MMLV) to transduce cells. We used fluorescence microscopy and flow cytometry to characterize MIR2-expressing U937 cells and found that they differentially downregulated cell surface levels of Major Histocompatibility Class I (MHCI) and ICAM-1 molecules, which resulted in a significant reduction in cytotoxic T-lymphocyte (CTL)-mediated killing of target cells, without altering natural killer (NK)-mediated target cell lysis in vitro. Our results provide a proof-of-principle that the use of viral immunomodulatory mechanisms can significantly minimize the acute cellular alloimmune response mediated via CTLs and NK cells. In addition, this ex vivo gene delivery strategy using retroviral vectors can be easily implemented in an allogeneic cell-based tissue engineered construct and perhaps extend the life of allogeneic cells in vivo.