Type 1 Epstein-Barr virus (EBV) strains immortalize B lymphocytes in vitro much more efficiently than type 2 EBV, a difference previously mapped to the EBNA-2 locus. Here we demonstrate that the greater transforming activity of type 1 EBV correlates with a stronger and more rapid induction of the viral oncogene LMP-1 and the cell gene CXCR7 (which are both required for proliferation of EBV-LCLs) during infection of primary B cells with recombinant viruses. Surprisingly, although the major sequence differences between type 1 and type 2 EBNA-2 lie in N-terminal parts of the protein, the superior ability of type 1 EBNA-2 to induce proliferation of EBV-infected lymphoblasts is mostly determined by the C-terminus of EBNA-2. Substitution of the C-terminus of type 1 EBNA-2 into the type 2 protein is sufficient to confer a type 1 growth phenotype and type 1 expression levels of LMP-1 and CXCR7 in an EREB2.5 cell growth assay. Within this region, the RG, CR7 and TAD domains are the minimum type 1 sequences required. Sequencing the C-terminus of EBNA-2 from additional EBV isolates showed high sequence identity within type 1 isolates or within type 2 isolates, indicating that the functional differences mapped are typical of EBV type sequences. The results indicate that the C-terminus of EBNA-2 accounts for the greater ability of type 1 EBV to promote B cell proliferation, through mechanisms that include higher induction of genes (LMP-1 and CXCR7) required for proliferation and survival of EBV-LCLs.