Ovine leukemia/lymphoma resulting from bovine leukemia virus infection of sheep offers a large animal model for studying mechanisms underlying leukemogenesis. Silencing of viral information including Tax, the major contributor to the oncogenic potential of the virus, is critical if not mandatory for tumor progression. In this study, we have identified epigenetic mechanisms that govern the complete suppression of viral expression, using a lymphoma-derived B-cell clone carrying a silent provirus. Silencing was not relieved by injection of the malignant B cells into sheep. However, exogenous expression of Tax or treatment with either the DNA methyltransferase inhibitor 5'azacytidine or the histone deacetylase (HDAC) inhibitor trichostatin A rescued viral expression, as demonstrated by in vivo infectivity trials. Comparing silent and reactivated provirus, we found mechanistic connections between chromatin conformation and tumor-associated transcriptional repression. Silencing is associated with DNA methylation and decreased accessibility of promoter sequences. HDAC1 and the transcriptional corepressor mSin3A are associated with the inactive but not the reactivated promoter. Silencing correlates with a repressed chromatin structure marked by histone H3 and H4 hypoacetylation, a loss of methylation at H3 lysine 4, and an increase of H3 lysine 9 methylation. These observations point to the critical role of epigenetic mechanisms in tumor-specific virus/oncogene silencing, a potential strategy to evade immune response and favor the propagation of the transformed cell.