Poxviruses are dsDNA viruses with large genomes. Many genes in the genome remain uncharacterized, and recent studies have demonstrated that the poxvirus transcriptome includes numerous so-called anomalous transcripts not associated with open reading frames. Here, we characterize the expression and role of an apparently non-coding RNA in orthopoxviruses, which we call viral hairpin RNA (vhRNA). Using a bioinformatics approach, we predicted expression of a transcript not associated with an open reading frame that is likely to form a stem-loop structure due to the presence of a 21 nt palindromic sequence. Expression of the transcript as early as 2 h post-infection was confirmed by northern blot and analysis of publicly available vaccinia virus infected cell transcriptomes. The transcription start site was determined by RACE PCE and transcriptome analysis, and early and late promoter sequences were identified. Finally, to test the function of the transcript we generated an ectromelia virus knockout, which failed to form plaques in cell culture. The important role of the transcript in viral replication was further demonstrated using siRNA. Although the function of the transcript remains unknown, our work contributes to evidence of an increasingly complex poxvirus transcriptome, suggesting that transcripts such as vhRNA not associated with an annotated open reading frame can play an important role in viral replication.