The high degree of methylation of the frog virus 3 (FV3) genome suggests that FV3-infected cells are capable of transcribing highly methylated DNA. We tested this hypothesis by assaying the transcriptional activity of adenovirus promoters known to be inhibited by methylation. Plasmid constructs containing the E1a and E2aE promoters of adenovirus type 12 linked to the gene for chloramphenicol acetyltransferase [(CAT) EC 126.96.36.199], when methylated and introduced into eukaryotic cells, promoted CAT synthesis only when the cells were subsequently infected with FV3. Mapping of transcriptional initiation sites revealed that the same sites in the E1a promoter were used for the initiation of transcription in uninfected and infected cells. Moreover, Southern blots showed that transfected plasmid DNA from FV3-infected cells was not demethylated. The absence of CAT-specific RNA in transfected cells infected with FV3 in the presence of protein synthesis inhibitors demonstrated that a virus-induced protein was responsible for the trans-activation. Inhibition of transcription from the methylated template by alpha-amanitin indicated that a functional host RNA polymerase II is required for transcription of methylated DNA in FV3-infected cells. The virus-induced trans-acting protein presumably alters either host RNA polymerase II or the methylated DNA template to allow transcription from the methylated adenovirus promoters.