Epstein-Barr virus (EBV) causes infectious mononucleosis and is associated with various malignancies, including Burkitt's lymphoma and nasopharyngeal carcinoma. Like all herpesviruses, the EBV life cycle alternates between latency and lytic replication. During latency, the viral genome is largely silenced by host-driven methylation of CpG motifs and, in the switch to the lytic cycle, this epigenetic silencing is overturned. A key event is the activation of the viral BRLF1 gene by the immediate-early protein Zta. Zta is a bZIP transcription factor that preferentially binds to specific response elements (ZREs) in the BRLF1 promoter (Rp) when these elements are methylated. Zta's ability to trigger lytic cycle activation is severely compromised when a cysteine residue in its bZIP domain is mutated to serine (C189S), but the molecular basis for this effect is unknown. Here we show that the C189S mutant is defective for activating Rp in a Burkitt's lymphoma cell line. The mutant is compromised both in vitro and in vivo for binding two methylated ZREs in Rp (ZRE2 and ZRE3), although the effect is striking only for ZRE3. Molecular modeling of Zta bound to methylated ZRE3, together with biochemical data, indicate that C189 directly contacts one of the two methyl cytosines within a specific CpG motif. The motif's second methyl cytosine (on the complementary DNA strand) is predicted to contact S186, a residue known to regulate methyl-ZRE recognition. Our results suggest that C189 regulates the enhanced interaction of Zta with methylated DNA in overturning the epigenetic control of viral latency. As C189 is conserved in many bZIP proteins, the selectivity of Zta for methylated DNA may be a paradigm for a more general phenomenon.