Human herpesviruses utilize an impressive range of strategies to evade the immune system during their lytic replicative cycle, including reducing the expression of cell surface major histocompatibility complex (MHC) and immunostimulatory molecules required for recognition and lysis by virus-specific cytotoxic T cells. Study of possible immune evasion strategies by Epstein-Barr virus (EBV) in lytically infected cells has been hampered by the lack of an appropriate permissive culture model. Using two-color immunofluorescence staining of cell surface antigens and EBV-encoded lytic cycle antigens, we examined EBV-transformed B-cell lines in which a small subpopulation of cells had spontaneously entered the lytic cycle. Cells in the lytic cycle showed a four- to fivefold decrease in cell surface expression of MHC class I molecules relative to that in latently infected cells. Expression of MHC class II molecules, CD40, and CD54 was reduced by 40 to 50% on cells in the lytic cycle, while no decrease was observed in cell surface expression of CD19, CD80, and CD86. Downregulation of MHC class I expression was found to be an early-lytic-cycle event, since it was observed when progress through late lytic cycle was blocked by treatment with acyclovir. The immediate-early transactivator of the EBV lytic cycle, BZLF1, did not directly affect expression of MHC class I molecules. However, BZLF1 completely inhibited the upregulation of MHC class I expression mediated by the EBV cell-transforming protein, LMP1. This novel function of BZLF1 elucidates the paradox of how MHC class I expression can be downregulated when LMP1, which upregulates MHC class I expression in latent infection, remains expressed in the lytic cycle.