Epstein-Barr virus (EBV) establishes a persistent infection in the human host and is associated with a variety of human cancers. Persistent infection results from a balance between the host immune response and viral immune evasion mechanisms. EBV infection is controlled initially by the innate immune response and later by T-cell-mediated adaptive immunity. EBV has evolved mechanisms to evade the host immune response so that it can persist for the lifetime of the host. Latent membrane protein 1 (LMP-1) is the EBV oncoprotein essential for B-cell immortalization by EBV. We show here that LMP-1 interacts with Tyk2, a signaling intermediate in the alpha interferon (IFN-alpha) signaling pathway, via a previously uncharacterized LMP-1 signaling domain. LMP-1 prevents Tyk2 phosphorylation and inhibits IFN-alpha-stimulated STAT2 nuclear translocation and interferon-stimulated response element transcriptional activity. Long-term culture of EBV+ lymphoblastoid cells in IFN-alpha is associated with outgrowth of a population expressing elevated LMP-1 protein levels, suggesting that cells expressing higher levels of LMP-1 survive the antiproliferative selective pressure imposed by IFN-alpha. These results show that LMP-1 can protect EBV+ cells from the IFN-alpha-stimulated antiviral/antiproliferative response and suggest that chronic IFN-alpha treatment may encourage the outgrowth of cells expressing elevated, and therefore potentially oncogenic, LMP-1 levels in EBV+ individuals.