EBV infects normal oral keratinocytes (NOKs) and plays an essential role in undifferentiated nasopharyngeal carcinoma (NPC). We previously showed that the EBV oncogene, LMP1, promotes proliferation and inhibits spontaneous differentiation in telomerase-immortalized NOKs grown in growth factor-restricted conditions. Here we have further examined the phenotypes of NOKs infected with wild-type EBV (WT EBV) versus an LMP1-deleted EBV mutant (ΔLMP1 EBV) in growth factor-restricted conditions. RNA-seq results show that WT EBV-infected NOKs not only have reduced differentiation, but also decreased expression of genes activated by the integrated stress response (ISR) pathway, in comparison to the ΔLMP1 EBV-infected cells. The ISR pathway is mediated by increased phosphorylation of the eIF2α translation initiation factor, leading to decreased translation of most cellular proteins but increased expression of some proteins, including ATF4 and CHOP. Immunoblot analyses confirmed that WT EBV-infected NOKs have decreased phosphorylation of eIF2α in comparison to uninfected and ΔLMP1 EBV-infected cells and showed that expression of LMP1 alone is sufficient to inhibit eIF2α phosphorylation. We found that LMP1 decreases the activity of two different eIF2α kinases, PERK and GCN2, in WT EBV-infected NOKs, resulting in decreased expression of the ISR-induced transcription factors, ATF4 and CHOP, in WT EBV-infected versus uninfected and ΔLMP1 EBV-infected NOKs. Furthermore, we found that both GCN2 and PERK activity are required for efficient TPA-induced lytic EBV reactivation and TPA-mediated epithelial cell differentiation. In addition, we demonstrate that over-expression of CHOP is sufficient to induce both lytic EBV reactivation and epithelial cell differentiation in WT EBV-infected NOKs and NPC cells and show that this effect is mediated by CHOP activation of the differentiation-inducing transcription factors, KLF4 and BLIMP1. Our results suggest that inhibition of the ISR pathway by the EBV oncoprotein, LMP1, may promote early NPC development by preventing epithelial cell differentiation and lytic EBV reactivation.