Epstein-Barr Virus (EBV) latency and its associated carcinogenesis are regulated by dynamic changes in DNA methylation of both virus and host genomes. We show here that the Ten-Eleven Translocation 2 (TET2) gene, implicated in hydroxymethylation and active DNA demethylation, is a key regulator of EBV latency type DNA methylation patterning. EBV latency types are defined by DNA methylation patterns that restrict expression of viral latency genes. We show that TET2 mRNA and protein expression correlate with the highly demethylated EBV type III latency program permissive for expression of EBNA2, EBNA3s, and LMP transcripts. We show that shRNA depletion of TET2 results in a decrease in latency gene expression, but can also trigger a switch to lytic gene expression. TET2 depletion results in the loss of hydroxymethylated cytosine, and corresponding increase in cytosine methylation at key regulatory regions on the viral and host genomes. This also corresponded to a loss of RBP-jκ binding, and decreased histone H3K4 trimethylation at these sites. Furthermore, we show that the TET2 gene, itself, is regulated similar to the EBV genome. ChIP-Seq revealed that TET2 gene contains EBNA2-dependent RBP-jκ and EBF1 binding sites, and is subject to DNA methylation associated transcriptional silencing similar to EBV latency type III genomes. Finally, we provide evidence that TET2 colocalizes with EBNA2-EBF1-RBP-jκ binding sites, and can interact with EBNA2 by co-immunoprecipitation. Taken together, these findings indicate that TET2 gene transcripts are regulated similarly to EBV type III latency genes, and that TET2 protein is a cofactor of EBNA2 and co-regulator of the EBV type III latency program and DNA methylation state..IMPORTANCE Epstein-Barr Virus (EBV) latency and carcinogenesis involves the selective epigenetic modification of viral and cellular genes. Here, we show that TET2, a cellular tumor suppressor involved in active DNA demethylation, plays a central role in regulating DNA methylation state during EBV latency. TET2 is coordinately regulated and functionally interacts with the viral oncogene EBNA2. TET2 and EBNA2 function cooperatively to demethylate genes important for EBV-driven B cells growth transformation.