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Marek's disease virus (MDV) is an alphaherpesvirus that causes lethal T-cell lymphomas in chickens. MDV is unique in that it harbors two copies of a viral telomerase RNA subunit (vTR) in its genome exhibiting 88% sequence identity to the chicken orthologue, chTR. The minimal telomerase ribonucleoprotein complex consists of a protein subunit with reverse transcriptase activity (TERT) and TR. Physiologically, the complex compensates for the progressive telomere shortening that occurs during mitosis and is involved in the process of cellular immortalization. Previous studies showed that MDV vTR performes an auxiliary function during oncogenesis. Comparative in vitro analysis of the viral and chicken TR promoters revealed that the vTR promoter (PvTR) was up to 3-fold more efficient than the chTR promoter (PchTR) in avian cells and that the stronger transcriptional activity of PvTR resulted largely from an E-box located two nucleotides downstream of the transcriptional start site of the vTR gene. To test the hypothesis that PvTR is required for vTR expression and, hence, efficient tumor formation, we generated a recombinant virus, vPchTR+/+, in which the vTR promoter was replaced by that of chTR. In vivo, growth of vPchTR+/+ was indistinguishable from that of parental virus; however, tumor induction was reduced by >50% and lymphomas were smaller and less disseminated when compared to those induced by parental virus. We concluded that PvTR is not required for lytic replication in vivo but is essential for efficient transcription of vTR and thereby critical for efficient MDV lymphoma formation.