During lytic infection with Epstein-Barr virus (EBV), several viral lytic proteins function to evade immune recognition or to actively suppress immune cells. An EBV lytic transactivator, Zta, induces an immunosuppressive cytokine interleukin 10 (IL-10) in B cells, but whether it regulates IL-10 in the context of epithelial cells is unclear. In this study, we tested nasopharyngeal carcinoma (NPC) cell lines and found that Zta did not induce IL-10 in these epithelial cells. Interestingly, the conditioned medium of Zta-expressing NPC cells enhanced IL-10 production from monocytes. We further revealed that the IL-10-inducing effect involved at least two immunomodulators that were upregulated by Zta and secreted from NPC cells: granulocyte-macrophage colony-stimulating factor (GM-CSF) and prostaglandin E(2) (PGE(2)). Zta was recruited to and activated the GM-CSF promoter, thus upregulating GM-CSF expression. Zta also activated the promoter of cyclooxygenase-2 (COX-2), and Zta-induced COX-2 increased downstream PGE(2) production. Cotreatment with GM-CSF and PGE(2) synergistically induced IL-10 production from monocytes. The IL-10-inducing effect of the Zta-conditioned medium was reduced when GM-CSF or the COX-2/PGE(2) pathway was blocked. The conditioned medium of NPC cells with EBV lytic infection showed a similar increase of GM-CSF and PGE(2) levels as well as the IL-10-inducing effect on monocytes, and knockdown of Zta abolished all the effects. Therefore, through Zta-induced immunomodulators, EBV lytic infection in NPC cells can direct bystander monocytes to produce IL-10, which may be a novel way of EBV to promote local immunosuppression.