Latent membrane protein-1 (LMP1) is a signaling molecule expressed by Epstein-Barr virus during latency. LMP1 is essential for B-cell immortalization by Epstein-Barr virus and transforms rodent fibroblasts. It activates many distinct signaling pathways including the transcription factors NFkappaB and AP1. We have generated a mutant of LMP1 with four point mutations; amino acids 204, 206, and 208 were mutated to alanine, and amino acid 384 was mutated to glycine. This mutant, termed LMP1(AAAG), is not only unable to activate nuclear signaling pathways, but also inhibits signaling from wild type LMP1. We have demonstrated the effectiveness, selectivity, and mechanism of this inhibitory molecule. It inhibits LMP1-stimulated NFkappaB, STAT, and Jun transcriptional activity. It is selective, as it does not inhibit TNF or interleukin-2 signaling. We have demonstrated that it does not sequester the downstream signaling molecule, TRAF2, but instead binds LMP1 and interferes with its ability to bind TRAF2. This demonstrates the importance of the interplay between the signaling domains of LMP1 and the oligomeric structure of LMP1 for effective signaling. It identifies a tool that will be useful to probe LMP1 function in disease.