The Epstein-Barr virus (EBV) genome is highly methylated in latently infected cells. We recently reported that the EBV immediate-early (IE) protein BZLF1 (Z) preferentially binds to and activates transcription from the methylated form of the BRLF1 IE gene promoter (Rp). We now report that serine residue 186 in the Z DNA-binding domain plays an important role in the ability of Z to bind to and activate methylated Rp. A Z mutant containing an alanine residue at position 186 [Z(S186A)] was significantly defective in binding to methylated, as well as unmethylated, ZREs (Z-responsive elements) in Rp and was unable to activate lytic EBV gene transcription from the methylated or demethylated form of the viral genome. A Z mutant containing threonine at residue 186 [Z(S186T)] bound only to the methylated form of the ZRE-2 site in Rp and induced lytic EBV gene transcription from the methylated, but not demethylated, form of the viral genome. The defect in both of these mutants was primarily due to an inability to activate the Rp in the context of the viral genome. Finally, a Z mutant containing an aspartic acid at position 186 [Z(S186D)] did not bind to either the consensus AP-1 site or to the methylated or unmethylated Rp ZRE-2 site and did not induce lytic gene transcription. These results indicate that replacement of serine with threonine at residue 186 in the Z DNA-binding domain differentially affects its ability to reactivate the unmethylated, versus methylated, viral genome.