Gallid herpesvirus type 2 (GaHV-2) is an oncogenic alphaherpesvirus that induces malignant T-cell lymphoma in chicken. GaHV-2 encodes a viral telomerase RNA subunit (vTR) that plays a crucial role in virus-induced tumorigenesis, enhances telomerase activity, and possesses functions independent of the telomerase complex. vTR is driven by a robust viral promoter, highly expressed in virus-infected cells, and regulated by two c-Myc response elements (c-Myc REs). The regulatory mechanisms involved in controlling vTR and other genes during viral replication and latency remain poorly understood but are crucial to understanding this oncogenic herpesvirus. Therefore, we investigated DNA methylation patterns of CpG dinucleotides found in the vTR promoter and measured the impact of methylation on telomerase activity. We demonstrated that telomerase activity was considerably increased following viral reactivation. Furthermore, CpG sites within c-Myc REs showed specific changes in methylation after in vitro reactivation and in infected animals over time. Promoter reporter assays indicated that one of the c-Myc REs is involved in regulating vTR transcription, and that methylation strongly influenced vTR promoter activity. To study the importance of the CpG sites found in c-Myc REs in virus-induced tumorigenesis, we generated recombinant virus containing mutations in CpG sites of c-Myc REs together with the revertant virus by two-step Red-mediated mutagenesis. Introduced mutations in the vTR promoter did not affect the replication properties of the recombinant viruses in vitro In contrast, replication of the mutant virus in infected chickens was severely impaired, and tumor formation completely abrogated. Our data provides an in-depth characterization of c-Myc oncoprotein REs and the involvement of DNA methylation in transcriptional regulation of vTR. IMPORTANCE Previous studies demonstrated that telomerase RNAs possess functions that promote tumor development independent of the telomerase complex. vTR is a herpesvirus-encoded telomerase RNA subunit that plays a crucial role in virus-induced tumorigenesis and is expressed by a robust viral promoter that is highly regulated by the c-Myc oncoprotein binding to the E-boxes. Here, we demonstrated that the DNA methylation patterns in the functional c-Myc response elements of the vTR promoter change upon reactivation from latency, and that demethylation strongly increases telomerase activity in virus-infected cells. Moreover, the introduction of mutation in the CpG dinucleotides of the c-Myc binding sites resulted in decreased vTR expression and complete abrogation of tumor formation. Our study provides further confirmation of the involvement of specific DNA methylation patterns in the regulation of vTR expression and vTR importance for virus-induced tumorigenesis.