Epstein-Barr virus (EBV) in vivo is known to establish persistent infection in resting, circulating memory B cells and to productively replicate in plasma cells. Until now, the molecular mechanism of how EBV switches from latency to lytic replication in vivo was not known. Here, we report that the plasma cell differentiation factor, XBP-1s, activates the expression of the master regulator of EBV lytic activation, BZLF1. Using reporter assays, we observed that XBP-1s was able to transactivate the BZLF1 promoter, Zp, in a plasma cell line and other lymphoid cell lines but, interestingly, not in epithelial cell lines. We have identified an XBP-1s binding site on the ZID/ZII region of Zp, which when abolished by site-directed mutagenesis led to abrogation of XBP-1s binding and promoter activation. Using the chromatin immunoprecipitation assay, we observed direct binding of XBP-1s to endogenous Zp in an EBV-infected plasma cell line. Finally, in the same cell line, we observed that overexpression of XBP-1s resulted in increased expression of BZLF1, while knockdown of XBP-1s with short hairpin RNA drastically reduces BZLF1 expression. We suggest that EBV harnesses the B-cell terminal differentiation pathway via XBP-1s as a physiological signal to reactivate and begin viral replication. We are currently investigating other signals, such as the endoplasmic reticulum stress response proteins, which act upstream of XBP-1s, to identify other interacting factors that initiate and/or amplify the lytic switch.