Epstein-Barr virus (EBV) infects more than 90% of the adult human population. Undifferentiated nasopharyngeal carcinoma (NPC) is common in Southeast Asia, with a particularly high incidence among southern Chinese. The EBV genome can be detected in practically all cancer cells in undifferentiated NPC. The role of EBV in pathogenesis of undifferentiated NPC remains elusive. NPC cell lines are known to be difficult to establish in culture. The EBV+ve NPC cell lines, even if established in culture, rapidly lost their EBV episomes upon prolonged propagation. At present, the C666-1 NPC cell line, which is defective in lytic EBV reactivation, is the only EBV+ve NPC cell line available for NPC and EBV research. The need to establish new and representative NPC cell lines is eminent for NPC and EBV research. In this study, we report the use of the Rho-associated kinase inhibitor (Y-27632) has facilitated the establishment of a new EBV+ve NPC cell line from an earlier established NPC xenograft, C17. The C17 cell line was tumorigenic in immune-deficient mice (NOD/SCID). It retained the EBV episomes and could be induced to undergo productive lytic reactivation of EBV to generate infectious virus particles. The C17 cell line represents a new investigative tool for NPC and EBV studies. The ability of C17 to undergo lytic reactivation is unique and opens up the opportunity to examine regulation of latent and lytic infection of EBV and their contributions to NPC pathogenesis.