Kaposi’s sarcoma-associated herpesvirus (KSHV) establishes a latent infection in the cell nucleus, but where KSHV episomal genomes are tethered and the mechanisms underlying KSHV lytic reactivation are unclear. Here, we study the nuclear microenvironment of KSHV episomes and show that the KSHV latency-lytic replication switch is regulated via viral long non-coding (lnc)RNA-CHD4 (chromodomain helicase DNA binding protein 4) interaction. KSHV episomes localize with a CHD4 complex, ChAHP, at epigenetically active genomic regions and tethers frequently near centromeric regions of host chromosomes. The ChAHP complex also occupies the 5’-region of a highly-inducible lncRNAs and terminal repeats of KSHV genome with latency-associated nuclear antigen (LANA). Viral lncRNA binding competes with CHD4 DNA binding, and KSHV reactivation is accompanied by the detachment of KSHV episomes from host chromosome docking sites We propose a model in which elevated lncRNA expression determines the KSHV latency-lytic decision by regulating LANA/ChAHP DNA binding at inducible viral enhancers.