Human herpesviruses are characterized by distinct states of infection. Typically in permissive herpesvirus infection, abundant virus production results in cell lysis. In latent transforming Epstein-Barr virus (EBV) infection, viral proteins that induce cell growth are expressed. The immunodeficiency-associated hairy leukoplakia (HLP) lesion is the only pathologic manifestation of permissive EBV infection; however, within HLP, viral proteins characteristic of latent infection have also been detected. In this study, we further analyzed expression of EBV latent genes and investigated their contribution to the unique histologic phenotype of HLP. Coexpression of lytic and transforming viral proteins was detected simultaneously within individual HLP keratinocytes. LMP1 has now been shown to be uniformly expressed in the affected tissue, and it is associated and colocalizes with tumor necrosis factor receptor-associated factor (TRAF) signaling molecules. Effects induced by activated TRAF signaling that were detected in HLP included activation of NF-kappaB and c-Jun terminal kinase 1 (JNK1) and upregulated expression of epidermal growth factor receptor (EGFR), CD40, A20, and TRAFs. This study identifies a novel state of EBV infection with concurrent expression of replicative and transforming proteins. It is probable that both replicative and latent proteins contribute to HLP development and induce many of the histologic features of HLP, such as acanthosis and hyperproliferation. In contrast to other permissive herpesvirus infections, expression of EBV transforming proteins within the permissively infected HLP tissue enables epithelial cell survival and may enhance viral replication.