Epstein-Barr virus (EBV) establishes lifelong latent infections in humans. EBV isolates worldwide are classified as type 1 or type 2 based on their EBNA-2 gene sequence. Type 1 EBV is more efficient at B cell transformation, a property previously mapped to the EBNA-2 locus. Previous work using EREB2.5 cells in a trans-complementation assay showed that the superior ability of type 1 EBNA-2 to sustain B cell proliferation is mostly determined by its C-terminal region. In this study, conversion of a single amino acid in the transactivation domain (TAD), from serine in type 2 EBNA-2 to the aspartate residue in the type 1 protein (S442D), was remarkably found to confer the type 1 growth-promoting phenotype in the EREB2.5 growth assay. The mechanism of the greater transformation efficiency of type 1 EBV appears to involve differential regulation of EBNA-2 target genes. The superior growth properties of type 1 EBNA-2 correlate with the greater induction and activation of viral LMP-1 and cellular CXCR7, compared to type 2 EBNA-2. 5' RACE was used to identify the transcription start site (TSS) of the CXCR7 promoter transcribed in response to EBNA-2. In chromatin immunoprecipitation (ChIP) assays, type 1 EBNA-2 was found to associate more strongly than the type 2 protein with EBNA-2 binding sites near the LMP-1 and CXCR7 genes. D442 was shown to increase binding of type 2 EBNA-2 to some sites at differentially regulated genes. Unbiased motif searching identified an ETS-interferon regulatory factor (IRF) composite element (EICE) that closely resembles the sequence known to mediate EBNA-2 regulation of the LMP-1 promoter. This element may therefore confer the differential effects of type 1 and type 2 EBNA-2 on both LMP-1 and cell gene activation resulting in superior immortalisation by type 1 EBV.