Adult T cell leukemia (ATL) is an aggressive malignancy secondary to chronic infection by the human T-cell leukemia virus type 1 (HTLV-1) infection. Two viral proteins, Tax and HBZ, play central roles in ATL leukemogenesis. Tax expression transforms T cells in vitro and induces ATL-like disease in mice. Tax also induces a rough eye phenotype and increases hemocyte count in Drosophila melanogaster, indicative of transformation. Among multiple functions, Tax modulates the expression of the enhancer of zeste homolog 2 (EZH2), a methyltransferase of the Polycomb Repressive Complex 2 (PRC2), leading to H3K27me3-dependent reprogramming of around half of cellular genes. HBZ is a negative regulator of Tax-mediated viral transcription. HBZ effects on epigenetic signatures are underexplored. Here, we established an hbz transgenic fly model, and demonstrated that, unlike Tax, which induces NF-κB activation and enhanced PRC2 activity creating an activation loop, HBZ neither induces transformation nor NF-κB activation in vivo. However, overexpression of Tax or HBZ increases the PRC2 activity and both proteins directly interact with PRC2 complex core components. Importantly, overexpression of HBZ in tax transgenic flies prevents Tax-induced NF-κB or PRC2 activation and totally rescues Tax-induced transformation and senescence. Our results establish the in vivo antagonistic effect of HBZ on Tax-induced transformation and cellular effects. This study helps understanding long-term HTLV-1 persistence and cellular transformation and opens perspectives for new therapeutic strategies targeting the epigenetic machinery in ATL.