The latency-associated nuclear antigen (LANA-1) of Human Herpes Virus 8 (HHV-8), alternatively called Kaposi Sarcoma Herpes Virus (KSHV) is constitutively expressed in all HHV-8 infected cells. LANA-1 accumulates in well-defined foci that co-localize with the viral episomes. We have previously shown that these foci are tightly associated with the borders of heterochromatin 1. We have also shown that exogenously expressed LANA-1 causes an extensive re-organization of Hoechst 33248 DNA staining patterns of the nuclei in non-HHV-8 infected cells 2. Here we show that this effect includes the release of the bulk of DNA from heterochromatic areas, in both human and mouse cells, without affecting the overall levels of heterochromatin associated histone H3 lysine 9 tri-methylation (3MK9H3). The release of DNA from the heterochromatic chromocenters in LANA-1 transfected mouse cells co-incides with the dispersion of the chromocenter associated methylcytosin binding protein 2 (MECP2). The localization of 3MK9H3 to the remnants of the chromocenters remains unaltered. Moreover, exogeneously expressed LANA-1 leads to the relocation of the chromocenters to the nuclear periphery, indicating extensive changes in the positioning of the chromosomal domains in the LANA-1 harboring interphase nucleus. Using a series of deletion mutants we have shown that the chromatin rearranging effects of LANA-1 require the presence of a short (57 amino acid) region that is located immediately upstream of the internal acidic repeats. This sequence lies within the previously mapped binding site to histone methyltransferase SUV39H1. We suggest that the highly concentrated LANA-1, anchored to the host genome in the nuclear foci of latently infected cells and replicated through each cell generation, may function as "epigenetic modifier". The induction of histone modification in adjacent host genes may lead to altered gene expression, thereby contributing to the viral oncogenesis.