Epstein-Barr virus expresses a cytoplasmic and plasma membrane protein (LMP) in latently infected growth transformed lymphocytes. The gene specifying LMP has now been expressed in NIH3T3 and Rat-1 cells. Expression of the gene in these cells resulted in altered cell morphology and some resistance to the growth inhibiting effect of medium containing low serum. In Rat-1 cells, LMP expression often led to loss of contact inhibition and anchorage-independent growth in soft agar. Rat-1 cells expressing LMP were uniformly tumorigenic in nude mice. Thus, LMP is a transforming gene which is likely to account for many aspects of EBV induced cell transformations. This is the first demonstration of a transforming gene in Epstein-Barr virus, a ubiquitous human pathogen associated with neoplasia.