EBV transformation of human B cells in vitro results in establishment of immortalized cell lines (lymphoblastoid cell lines (LCL)) that express viral transformation-associated latent genes and exhibit a fixed, lymphoblastoid phenotype. In this report, we show that CD4(+) T cells can modify the differentiation state of EBV-transformed LCL. Coculture of LCL with EBV-specific CD4(+) T cells resulted in an altered phenotype, characterized by elevated CD38 expression and decreased proliferation rate. Relative to control LCL, the cocultured LCL were markedly less susceptible to lysis by EBV-specific CD8(+) CTL. In contrast, CD4(+) T cell-induced differentiation of LCL did not diminish sensitivity of LCL to lysis by CD8(+) CTL specific for an exogenously loaded peptide Ag or lysis by alloreactive CD8(+) CTL, suggesting that differentiation is not associated with intrinsic resistance to CD8(+) T cell cytotoxicity and that evasion of lysis is confined to EBV-specific CTL responses. CD4(+) T cell-induced differentiation of LCL and concomitant resistance of LCL to lysis by EBV-specific CD8(+) CTL were associated with reduced expression of viral latent genes. Finally, transwell cocultures, in which direct LCL-CD4(+) T cell contact was prevented, indicated a major role for CD4(+) T cell cytokines in the differentiation of LCL.