Drosophila melanogaster has played a key role in our understanding of invertebrate immunity. However, both functional and evolutionary studies of host-virus interaction in Drosophila have been limited by a dearth of native virus isolates. In particular, despite a long history of virus research, DNA viruses of D. melanogaster have only recently been described, and none have been available for experimental study. Here we report the isolation and comprehensive characterisation of Kallithea virus, a large double-stranded DNA virus, and the first DNA virus to have been reported from wild populations of D. melanogaster. We find that Kallithea virus infection is costly for adult flies, reaching high titres in both sexes and disproportionately reducing survival in males, and movement and late fecundity in females. Using the Drosophila Genetic Reference Panel, we quantify host genetic variance for virus-induced mortality and viral titre and identify candidate host genes that may underlie this variation, including Cdc42-interacting protein 4. Using full transcriptome sequencing of infected males and females, we examine the transcriptional response of flies to Kallithea virus infection and describe differential regulation of virus-responsive genes. This work establishes Kallithea virus as a new tractable model to study the natural interaction between D. melanogaster and DNA viruses, and we hope it will serve as a basis for future studies of immune responses to DNA viruses in insects.