Epstein-Barr virus (EBV) establishes a latent form of infection in memory B cells, while antibody-secreting plasma cells often harbor the lytic form of infection. The switch between latent and lytic EBV infection is mediated by the two viral immediate-early proteins BZLF1 (Z) and BRLF1 (R), which are not expressed in latently infected B cells. Here we demonstrate that a cellular transcription factor that plays an essential role in plasma cell differentiation, X-box-binding protein 1 (XBP-1), also activates the transcription of the two EBV immediate-early gene promoters. In reporter gene assays, XBP-1 alone was sufficient to activate the R promoter, whereas the combination of XBP-1 and protein kinase D (PKD) was required for efficient activation of the Z promoter. Most importantly, the expression of XBP-1 and activated PKD was sufficient to induce lytic viral gene expression in EBV-positive nasopharyngeal carcinoma cells and lymphoblastoid cells, while an XBP-1 small interfering RNA inhibited constitutive lytic EBV gene expression in lymphoblastoid cells. These results suggest that the plasma cell differentiation factor XBP-1, in combination with activated PKD, can mediate the reactivation of EBV, thereby allowing the viral life cycle to be intimately linked to plasma cell differentiation.