Eight of the nine viral antigens known to be expressed in in vitro Epstein-Barr virus (EBV)-transformed B-lymphoblastoid cell lines are downregulated in EBV-carrying Burkitt lymphomas (BL). Only EBNA1 can be detected in BL biopsies and BL-derived cell lines that maintain the representative phenotype during culture in vitro (group I BL lines). This restricted pattern of viral gene expression is accompanied by extensive EBV DNA methylation and can be reversed by treatment with the demethylating agent 5-azacytidine. Transcription of the genes encoding the six transformation-associated EBNAs can be initiated from one of two promoters located in the BamHI C and W regions, respectively, of the virus genome. We show that discrete sites within the BamHI W enhancer region are methylated in the group I BL lines Rael, Cheptage, and Elijah and become unmethylated after 5-azacytidine treatment that induces the expression of EBNA2. Demethylation correlates with activation of transcription from the BamHI W promoter as determined by S1 protection analysis. Reporter plasmids in which the W enhancer sequences were linked to the chloramphenicol acetyltransferase gene were active in untreated Rael, Cheptage, and Elijah cells, demonstrating that all of the required transcription factors are present in group I BL cells. Conversely, in vitro methylation of the enhancer sequences abolished their activity. The results suggest that methylation of control regions in the EBV genome may play a critical role for the regulation of viral gene expression in tumor cells.