ZEBReplication Activator (ZEBRA), a viral basic zipper protein that initiates the Epstein-Barr viral lytic cycle, binds to DNA and activates transcription through heptamer ZEBRA response elements (ZREs) related to AP-1 sites. A component of the biologic action of ZEBRA is attributable to binding methylated CpGs in ZREs present in the promoters of viral lytic cycle genes. Residue S186 of ZEBRA, Z(S186), which is absolutely required for disruption of latency, participates in the recognition of methylated DNA. We find that mutant cellular AP-1 proteins, Jun(A266S) and Fos(A151S), with alanine-to-serine substitutions homologous to Z(S186), exhibit altered DNA-binding affinity and preferentially bind methylated ZREs. These mutant AP-1 proteins acquire functions of ZEBRA; they activate expression of many viral early lytic cycle gene transcripts in cells harboring latent EBV but are selectively defective in activating expression of some viral proteins and are unable to promote viral DNA replication. Transcriptional activation by mutant c-Jun and c-Fos that have acquired the capacity to bind methylated CpG challenges the paradigm that DNA methylation represses gene expression.