Bovine Leukemia Virus (BLV)-induced B-cell leukemia in sheep is a valuable large animal model for investigating oncogenic mechanisms, particularly those associated with human T-cell leukemia virus 1 (HTLV-1). Multiple factors including viral genes, genetic and epigenetic alterations, and the host immune system are likely to contribute and cooperate in the leukemogenesis of adult T-cell leukemia (ATL) in human and B-cell leukemia in sheep. While considerable effort has been made to explore the role of viral determinants in the transformation process, the participation of host-related mechanisms has been poorly addressed. We discuss recent evidence from sheep studies in the context of the growing knowledge that has accumulated in the field of epigenetics in human cancer. These results support the hypothesis that epigenetic events, which were initially identified as a causative mechanism of virus silencing, are also major players in host gene regulation. Future studies in sheep will increase the number of genes identified that are aberrantly regulated by epigenetic processes and identify potential biomarkers which may be used as therapeutic targets in leukemia.