A latent infection membrane protein (LMP) encoded by the Epstein-Barr virus (EBV) genome in latently infected, growth-transformed lymphocytes alters the phenotype of a human EBV-negative B-lymphoma cell line (Louckes) when introduced by gene transfer. These LMP-expressing cells exhibit increased homotypic adhesion due to increased expression of the adhesion molecules LFA-1 and ICAM-1. Increased homotypic adhesion could foster B-cell growth by facilitating autocrine growth factor effects. LFA-3 expression is also induced. The induction of LFA-3 and ICAM-1 results in increased heterotypic adhesion to T lymphocytes. This could result in more effective T-cell immune surveillance. Since LMP is expressed in EBV-transformed lymphocytes and has been demonstrated to transform rodent fibroblasts in vitro, a wide range of possible effects on B-lymphoma cell growth were assayed. In the Louckes B-lymphoma cell line, EBV LMP causes increased cell size, acid production, plasma membrane ruffling, and villous projections. Although cell proliferation rate was not greatly affected, the steady-state intracellular free calcium level, transforming growth factor beta responsiveness, and expression of the lymphocyte activation markers (CD23 and transferrin receptor) were increased. Thus, LMP appears to be a mediator of EBV effects on B-cell transformation. In transfected lymphoma cells, LMP localizes to patches at the cell periphery and associates with the cytoskeleton as it does in EBV-transformed B lymphocytes or in rodent fibroblasts. A partially deleted form of LMP (D1LMP) does not aggregate in patches or associate with the cytoskeleton and had little effect on B-cell growth. Thus, cytoskeletal association may be integral to LMP activity.