The exquisite sensitivity of the Burkitt's lymphoma (BL)-derived cell line Daudi to type I interferons has not previously been explained. Here we show that expression of an Epstein-Barr virus (EBV) transcript, designated D-HIT (Y. Gao et al., J. Virol. 71:84-94, 1997), correlates with the sensitivity of different Daudi cell isolates (or that of other EBV-carrying cells, where known) to alpha interferon (IFN-alpha). D-HIT, transcribed from a GC-rich repetitive region (IR4) of the viral genome, is highly structured, responding to RNase digestion in a manner akin to double-stranded RNA. Comparing EBV-carrying BL cell lines with differing responses to IFN-alpha, we found the protein levels of the dsRNA-activated kinase, PKR, to be similar, whereas the levels of the autophosphorylated active form of PKR varied in a manner that correlated with endogenous levels of D-HIT expression. In a classical in vitro kinase assay, addition of either poly(I)-poly(C) or an in vitro-transcribed D-HIT homolog stimulated the autophosphorylation activity of PKR from IFN-alpha-treated cells in both EBV-positive and EBV-negative B lymphocytes. By transfection experiments, these RNAs were shown to reduce cell proliferation and to sensitize otherwise relatively insensitive Raji cells to IFN-alpha. The data lead to a model wherein the D-HIT viral RNA also serves as a possible transcriptional activator of IFN-alpha or cellular genes regulated by this cytokine.