Murine gammaherpesvirus 68 (MHV68) infection of mice provides a tractable small-animal system for assessing viral requirements for establishment of and reactivation from latency. The M2 gene product has no homology to any known proteins but has been shown to play a role in both the establishment of MHV68 latency and reactivation from latency. Furthermore, we have recently shown that M2 expression in primary murine B cells leads to enhanced proliferation, survival, and differentiation toward a preplasma memory B-cell phenotype (A. M. Siegel, J. H. Herskowitz, and S. H. Speck, PLoS Pathog. 4:e1000039, 2008). Previous studies have characterized the structure of the M2 transcript, but to date there has been no characterization of the M2 promoter, additional open reading frames (ORFs) in the M2 region, or identified splice acceptor and splice donor sites present in the previously characterized M2 gene transcript. Here we report (i) the identification and disruption of a novel transcript that encodes a short, previously unreported ORF (M2b) located in the intron between exon 1 and exon 2 of the M2 transcript; (ii) the identification of clustered but distinct M2 gene transcription initiation sites suggesting the presence of multiple promoters involved in regulating M2 gene transcription; (iii) the characterization in vivo of recombinant MHV68 harboring deletions within the identified M2 promoter region; and (iv) the in vivo analysis of recombinant MHV68 harboring mutations that ablate either the identified M2 splice acceptor or splice donor site. Finally, our 5' rapid amplification of cDNA ends in conjunction with splice acceptor mutation analyses confirmed that all detected M2 gene transcripts expressed during MHV68 infection in mice splice into the M2 ORF downstream of the first AUG codon, providing strong evidence that initiation of the M2 gene product arises from the second AUG codon located at residue 8 in the M2 ORF. This initial detailed analysis of M2 gene transcription in vivo will aid future studies on regulation of M2 gene expression.