EBV, a member of the herpes virus family, is a paradigm for human tumor viruses and a model of viral latency amenable for study in vitro. It induces resting human B lymphocytes to proliferate indefinitely in vitro and initially establishes a strictly latent infection in these cells. BZLF1, related to the cellular activating protein 1 (AP-1) family of transcription factors, is the viral master gene essential and sufficient to mediate the switch to induce the EBV lytic phase in latently infected B cells. Enigmatically, after infection BZLF1 is expressed very early in the majority of primary B cells, but its early expression fails to induce the EBV lytic phase. We show that the early expression of BZLF1 has a critical role in driving the proliferation of quiescent naïve and memory B cells but not of activated germinal center B cells. BZLF1's initial failure to induce the EBV lytic phase relies on the viral DNA at first being unmethylated. We have found that the eventual and inevitable methylation of viral DNA is a prerequisite for productive infection in stably, latently infected B cells which then yield progeny virus lacking cytosine-phosphatidyl-guanosine (CpG) methylation. This progeny virus then can repeat EBV's epigenetically regulated, biphasic life cycle. Our data indicate that the viral BZLF1 protein is crucial both to establish latency and to escape from it. Our data also indicate that EBV has evolved to appropriate its host's mode of methylating DNA for its own epigenetic regulation.