Latency-associated Epstein-Barr virus (EBV) gene expression induces cell proliferation. Unlike the latency associated genes, lytic gene expression in EBV, as well as other herpesviruses, elicits cell cycle arrest. Previous studies have shown that the EBV immediate early lytic transactivator, Zta, induces a G(0)/G(1) cell cycle arrest through induction of the cyclin-dependent kinase inhibitors, p21 and p27. Here we show that while EBV latency is intimately linked to activation of the protooncogene, c-myc, Zta represses c-myc expression. We also show that inhibition of c-myc expression is required for Zta-mediated growth arrest and for maximal induction of p21 and p27. Nevertheless, induction of p21 and p27 is also influenced by a c-myc-independent mechanism. A detailed genetic analysis of Zta's basic/DNA binding region identified two distinct subregions that contribute to full induction of p21 and p27. One subdomain influences p21 and p27 expression through the c-myc-dependent mechanism and the other subdomain influences p21 and p27 induction through the c-myc-independent pathway. Together, these studies further our understanding of the complex nature of Zta-induced growth arrest. (C) 2001 Academic Press.