Epstein-Barr virus (EBV) latent membrane protein 1 (LMP-1) is required for EBV immortalization of primary B cells in vitro. Signal transducers and activators of transcription (STATs) play a pivotal role in the initiation and maintenance of certain cancers. STAT proteins, especially STAT-1, -3, and -5, are persistently tyrosine phosphorylated or activated in many cancers. We show here that EBV-infected type III latency cells, in which the EBV oncoprotein, LMP-1 is expressed, express high levels of four STATs (STAT-1, -2, -3, and -5A) and that LMP-1 is responsible for the induction of three (STAT-1, -2, and -3). In addition, the C-terminal activator region 1 (CTAR-1) and CTAR-2 of LMP-1 cooperatively induced the expression of STAT-1. The cooperativity was evident when CTAR-1 and CTAR-2 were present in cis, but not in trans. Furthermore, NF-kappaB is an essential factor involved in the induction of STAT-1. Most of the induced STATs were not phosphorylated at the critical tyrosine residue activated by many cytokines. However, the induced STATs, at least STAT-1, were functional because it could be activated by interferon (IFN) and could upregulate an IFN-inducible gene. Finally, expression of STAT-1, but not STAT-2 and -3, is associated with EBV transformation. The association of the expression of STAT-1, -2, -3, and -5A with EBV type III latency and the expression of STAT-1 in the EBV transformation process may be part of the viral programming that regulates viral latency and cellular transformation.