Latent membrane protein 1 (LMP1) of Epstein-Barr virus (EBV) is an integral membrane protein which has transforming potential and is necessary but not sufficient for B-cell immortalization by EBV. LMP1 molecules aggregate in the plasma membrane and recruit tumour necrosis factor receptor (TNF-R) -associated factors (TRAFs) which are presumably involved in the signalling cascade leading to NF-kappaB activation by LMP1. Comparable activities are mediated by CD40 and other members of the TNF-R family, which implies that LMP1 could function as a receptor. LMP1 lacks extended extracellular domains similar to beta-adrenergic receptors but, in contrast, it also lacks any motifs involved in ligand binding. By using LMP1 mutants which can be oligomerized at will, we show that the function of LMP1 in 293 cells and B cells is solely dependent on oligomerization of its carboxy-terminus. Biochemically, oligomerization is an intrinsic property of the transmembrane domain of wild-type LMP1 and causes a constitutive phenotype which can be conferred to the signalling domains of CD40 or the TNF-2 receptor. In EBV, immortalized B cells cross-linking in conjunction with membrane targeting of the carboxy-terminal signalling domain of LMP1 is sufficient for its biological activities. Thus, LMP1 acts like a constitutively activated receptor whose biological activities are ligand-independent.