Latent membrane protein (LMP) is a latent Epstein-Barr virus (EBV) protein expressed in the EBV associated malignancy, nasopharyngeal carcinoma (NPC). Properties ascribed to this protein include inhibition of epithelial cell differentiation and deregulation of epithelial cellular gene expression, and are believed to contribute to the development of NPC. Studies to evaluate the oncogenic potential of LMP in epithelial cells have not been conclusive. We carried out studies to determine the tumorigenic activity of LMP in two human epithelial cell lines, SCC12F and HaCaT; while SCC12F LMP transfectants were non-tumorigenic in severe combined immunodeficient mice, HaCaT LMP transfectants were strongly oncogenic. The tumours produced were well differentiated, keratinising squamous cell carcinomas suggesting that LMP does not inhibit epithelial cell differentiation which conflicts with a previous report by Dawson et al. (1990). To resolve this discrepancy we examined the ability of HaCaT and SCC12F LMP transfectants to differentiate in a suspension culture assay. Both lines were able to differentiate to a similar extent as parental lines and control transfectants. Our results indicate that LMP is strongly oncogenic in human epithelial cells but that inhibition of differentiation is not necessarily a mechanism by which LMP contributes to the pathogenesis of NPC.