Recent studies have identified a limited number of cellular receptors that can stimulate an alternative NF-kappa B activation pathway that depends upon the inducible processing of NF-kappa B2 p100 to p52. Here it is shown that the latent membrane protein (LMP)-1 of Epstein-Barr virus can trigger this signaling pathway in both B cells and epithelial cells. LMP1-induced p100 processing, which is mediated by the proteasome and is dependent upon de novo protein synthesis, results in the nuclear translocation of p52.RelB dimers. Previous studies have established that LMP1 also stimulates the canonical NF-kappa B-signaling pathway that triggers phosphorylation and degradation of I kappa B alpha. Interestingly, LMP1 activation of these two NF-kappa B pathways is shown here to require distinct regions of the LMP1 C-terminal cytoplasmic tail. Thus, C-terminal-activating region 1 is required for maximal triggering of p100 processing but is largely dispensable for stimulation of I kappa B alpha phosphorylation. In contrast, C-terminal-activating region 2 is critical for maximal LMP1 triggering of I kappa B alpha phosphorylation and up-regulation of p100 levels but does not contribute to activation of p100 processing. Because p100 deletion mutants that constitutively produce p52 oncogenically transform fibroblasts in vitro, it is likely that stimulation of p100 processing by LMP1 will play an important role in its transforming function.