The interferon-inducible protein kinase PKR interacts with a number of small viral RNA species, including adenovirus VAI RNA and the Epstein-Barr virus-encoded RNA EBER-1. These RNAs bind to PKR and protect protein synthesis from inhibition by double-stranded RNA in the reticulocyte lysate system. Using a peptide phosphorylation assay we show here that EBER-1, like VAI, directly inhibits the activation of purified PKR. A second Epstein-Barr virus RNA, EBER-2, also regulates PKR. EBER-1, EBER-2 and VAI RNA exhibit mutually competitive binding to the native or recombinant enzyme, as assessed by U.V. crosslinking experiments and filter binding assays. The affinities of all three RNAs for PKR in vitro are similar (Kd = ca. 0.3 nM). Since this protein kinase has been proposed to exert a tumour suppressor function in vivo, the ability of EBER-1 to inhibit its activation suggests a role for this small RNA in cell transformation by Epstein-Barr virus.