The Epstein-Barr virus latent membrane protein 1 (LMP1) is essential for the transformation of B lymphocytes into lymphoblastoid cell lines. Previous data are consistent with a model that LMP1 is a constitutively activated receptor that transduces signals for transformation through its carboxyl-terminal cytoplasmic tail. One transformation effector site (TES1), located within the membrane proximal 45 residues of the cytoplasmic tail, constitutively engages tumor necrosis factor receptor-associated factors. Signals from TES1 are sufficient to drive initial proliferation of infected resting B lymphocytes, but most lymphoblastoid cells infected with a virus that does not express the 155 residues beyond TES1 fail to grow as long-term cell lines. We now find that mutating two tyrosines to an isoleucine at the carboxyl end of the cytoplasmic tail cripples the ability of EBV to cause lymphoblastoid cell outgrowth, thereby marking a second transformation effector site, TES2. A yeast two-hybrid screen identified TES2 interacting proteins, including the tumor necrosis factor receptor-associated death domain protein (TRADD). TRADD was the only protein that interacted with wild-type TES2 and not with isoleucine-mutated TES2. TRADD associated with wild-type LMP1 but not with isoleucine-mutated LMP1 in mammalian cells, and TRADD constitutively associated with LMP1 in EBV-transformed cells. In transfection assays, TRADD and TES2 synergistically mediated high-level NF-kappaB activation. These results indicate that LMP1 appropriates TRADD to enable efficient long-term lymphoblastoid cell outgrowth. High-level NF-kappaB activation also appears to be a critical component of long-term outgrowth.