Epigenetic events that are essential drivers of lymphocyte transformation remain incompletely characterized. We used models of Epstein-Barr virus (EBV)-induced B-cell transformation to document the relevance of protein arginine methyltransferase 5 (PRMT5) to regulation of epigenetic-repressive marks during lymphomagenesis. EBV(+) lymphomas and transformed cell lines exhibited abundant expression of PRMT5, a type II PRMT enzyme that promotes transcriptional silencing of target genes by methylating arginine residues on histone tails. PRMT5 expression was limited to EBV-transformed cells, not resting or activated B lymphocytes, validating it as an ideal therapeutic target. We developed a first-in-class, small-molecule PRMT5 inhibitor that blocked EBV-driven B-lymphocyte transformation and survival while leaving normal B cells unaffected. Inhibition of PRMT5 led to lost recruitment of a PRMT5/p65/HDAC3-repressive complex on the miR96 promoter, restored miR96 expression, and PRMT5 downregulation. RNA-sequencing and chromatin immunoprecipitation experiments identified several tumor suppressor genes, including the protein tyrosine phosphatase gene PTPROt, which became silenced during EBV-driven B-cell transformation. Enhanced PTPROt expression following PRMT5 inhibition led to dephosphorylation of kinases that regulate B-cell receptor signaling. We conclude that PRMT5 is critical to EBV-driven B-cell transformation and maintenance of the malignant phenotype, and that PRMT5 inhibition shows promise as a novel therapeutic approach for B-cell lymphomas.