Recently we reported that the down-regulation of CD99 (Mic2) is a primary requirement for the generation of Hodgkin's and Reed-Sternberg (H-RS) cells seen in Hodgkin's disease. In this study, we provide evidence that the down-regulation of CD99 is induced by high expression of Epstein-Barr virus (EBV) latent membrane protein 1 (LMP-1), which is highly expressed in H-RS cells of EBV-associated Hodgkin's disease. To investigate the effect of LMP-1 on the expression of CD99 in vitro, we established a stable cell line by transfecting an SV40-early promoter driven-LMP-1 expression construct into a neoplastic lymphoblastoid B cell line, IM9, in which the level of endogenous LMP-1 expression is almost negligible. In this cell line, the overexpression of LMP-1 led to the down-regulation of CD99 and the acquisition of morphological and functional characteristics of H-RS cells indistinguishable from those in lymph nodes of Hodgkin's disease patients and in CD99-deficient B cells. In addition, induced LMP-1 expression in an EBV-negative B cell clone, BJAB, directly caused the down-regulation of surface CD99 expression. Northern and Western analysis data, showing that overexpression of LMP-1 negatively influenced the expression of CD99, were supported by experiments in which a CD99 promoter-driven luciferase promoter reporter construct transfected into 293T cells was down-regulated when LMP-1 was coexpressed. Therefore, our data strongly suggest that the EBV LMP-1 protein plays a pivotal role in the down-regulation of CD99 via transcriptional regulation, which leads to the generation of the H-RS cells.