Epstein-Barr virus-encoded latent membrane protein-1 (LMP1) plays a fundamental role in the malignant transformation of nasopharyngeal carcinoma (NPC), although the mechanism is not well understood. Here, we showed that Limb-bud and Heart (LBH) is considerably downregulated in patient NPC tissues. The expression of LBH in biopsies of 40 consecutive NPC patients devoid of initial distant metastasis and treated according to consistent guidelines was also analyzed, and we found the LBH expression level was correlated with some of clinicopathological features, disease-specific survival (DSS), distant metastasis-free survival (DMFS). We further determined that LBH normally induces NPC cell cycle arrest at the G1/S transition, and LBH can suppress the growth of transplanted NPC tumors in vivo by downregulating LMP1-mediated NF-κB transcriptional activity. Transforming growth factor-beta 1 (TGF-β1) normally protects against tumor development by suppressing cell proliferation, but NPC cells acquire resistance to TGF-β1-mediated inhibition. We found that TGF-β1 inhibits NF-κB transcriptional activity and nasopharyngeal epithelial cell proliferation through upregulating LBH expression. These data reveal a previously unknown NPC transformation mechanism and provide a new concept and treatment strategy for LMP1-driven oncogenesis in NPC.