The association of Epstein-Barr virus (EBV) with nasopharyngeal carcinoma (NPC) has been known for some time, but the precise role of EBV in this cancer is poorly understood, due partly to the lack of an in vitro system for studying NPC cells and the effect of EBV on epithelial cells. Biopsies of NPC tumours have revealed expression of the EBV latent membrane protein (LMP) in 65% of cases, suggesting that in at least some NPC tumours LMP may contribute to cell transformation. Here we address the question of the effect of LMP expression on epithelial cells. Transfection of an immortalized, non-tumorigenic keratinocyte cell line (RHEK-1) with the LMP gene causes a striking morphological transformation: the originally flat, polygonal colonies change to bundles of spindle-shaped cells that form multilayer foci, and cytokeratin expression is down-regulated. Our results suggest that LMP expression may be an important causal factor in the development of NPC.