Our previous study reported that Epstein-Barr virus(EBV)-encoded latent membrane protein 1 (LMP1) could induce development of CD44(+/High) stem-like cells in nasopharyngeal carcinoma (NPC). However, the molecular mechanisms that underlie modulation of cancer stem cells (CSCs) in NPC remain unclear. Here, we show that LMP1 induced CSC-like properties through promotion of the expression of epithelial-mesenchymal transition-like cellular markers and through alterations in differentiation markers. Furthermore, LMP1 activated and triggered phosphoinositide 3-kinase/protein kinase B (PI3K/AKT) pathway, which subsequently stimulated expression of CSC markers, development of side population and tumor sphere formation. This suggests that PI3K/AKT pathway has an important role in the induction and maintenance of CSC properties in NPC. Similarly, PI3K/AKT pathway was also activated by phosphorylase in LMP1-induced CD44(+/High) cells. In addition, LMP1 greatly increased expression of miR-21 and downregulated expression of the miR-21 target, PTEN. Overexpression of miR-21 by transfection of miR-21 mimics into LMP1-transformed cells led to phosphorylase-mediated activation of the PI3K/AKT pathway and induction of CSCs. On the contrary, phosphorylation of the PI3K/AKT pathway and the expression of CSC were reversed by an miR-21 inhibitor. The specific inhibitor (Ly294002) of PI3K/AKT pathway significantly decreased expression of miR-21 and CSC markers and upregulated the expression of PTEN, which indicates that miR-21 and PTEN are the downstream effectors of PI3K/AKT and that expression of these two effectors are related to the development of NPC CSCs. Taken together, our novel findings indicate that LMP1, PI3K/AKT, miR-21 and PTEN constitute a positive feedback loop and have a key role in LMP1-induced CSCs in NPC.