Epstein-Barr virus (EBV) nuclear protein 2 (EBNA-2) is essential for EBV-induced B-cell transformation in vitro. EBNA-2 contains a 14-amino acid domain that directly activates transcription and is required for transformation. To determine whether another transcriptional activator can substitute for this function, a chimeric virus was constructed that contained a portion of the transcriptional activation domain from the herpes simplex virus VP16 protein inserted in place of the 14-amino acid domain of EBNA-2. The chimeric virus was able to transform B cells efficiently and transactivate expression of EBV and B-cell genes. Randomization of the 14-amino acid sequence in the domain markedly reduced its transcriptional activating activity and the transforming efficiency of the recombinant EBV. Mutation of a tryptophan within the 14-amino acid domain of EBNA-2 completely abolished transcriptional activation and B-cell transformation. These experiments indicate that EBNA-2 and VP16 activate transcription by similar mechanisms and that transcriptional activation is required for EBV-induced B-cell transformation.