Background: The Epstein-Barr virus (EBV)-encoded EBNA1 protein is expressed in all EBV-associated tumours, including undifferentiated nasopharyngeal carcinoma (NPC), where it is indispensable for viral replication, genome maintenance and viral gene expression. EBNA1's transcription factor-like functions also extend to influencing the expression of cellular genes involved in pathways commonly dysregulated during oncogenesis, including elevation of AP-1 activity in NPC cell lines resulting in enhancement of angiogenesis in vitro. In this study we sought to extend these observations by examining the role of EBNA1 upon another pathway commonly deregulated during carcinogenesis; namely NF-kappa B. Results: In this report we demonstrate that EBNA1 inhibits the canonical NF-kappa B pathway in carcinoma lines by inhibiting the phosphorylation of IKK alpha/beta. In agreement with this observation we find a reduction in the phosphorylation of I kappa Ba and reduced phosphorylation and nuclear translocation of p65, resulting in a reduction in the amount of p65 in nuclear NF-kappa B complexes. Similar effects were also found in carcinoma lines infected with recombinant EBV and in the EBV-positive NPC-derived cell line C666-1. Inhibition of NF-kappa B was dependent upon regions of EBNA1 essential for gene transactivation whilst the interaction with the deubiquitinating enzyme, USP7, was entirely dispensable. Furthermore, in agreement with EBNA1 inhibiting p65 NF-kappa B we demonstrate that p65 was exclusively cytoplasmic in 11 out of 11 NPC tumours studied. Conclusions: Inhibition of p65 NF-kappa B in murine and human epidermis results in tissue hyperplasia and the development of squamous cell carcinoma. In line with this, p65 knockout fibroblasts have a transformed phenotype. Inhibition of p65 NF-kappa B by EBNA1 may therefore contribute to the development of NPC by inducing tissue hyperplasia. Furthermore, inhibition of NF-kappa B is employed by viruses as an immune evasion strategy which is also closely linked to oncogenesis during persistent viral infection. Our findings therefore further implicate EBNA1 in playing an important role in the pathogenesis of NPC.