Lytic Epstein-Barr virus (EBV) replication occurs in differentiated, but not undifferentiated, epithelial cells. Retinoic acid (RA) induces epithelial cell differentiation. The conversion of retinol into its active form, retinoic acid, requires retinol dehydrogenase enzymes. Here we show that AGS gastric carcinoma cells containing the lytic form of EBV infection have enhanced expression of a gene (DHRS9) encoding an enzyme that mediates conversion of retinol into RA. DHRS9 expression is also increased following induction of lytic viral infection in EBV-positive Burkitt lymphoma cells. We demonstrate that the EBV immediate-early protein, BZLF1, activates the DHRS9 promoter through a direct DNA binding mechanism. Furthermore, BZLF1 expression in AGS cells is sufficient to activate DHRS9 gene expression and increases the ability of retinol to induce the RA-responsive gene, CYP26A1. Production of RA during the lytic form of EBV infection may enhance viral replication by promoting keratinocyte differentiation.