Marek's disease virus (MDV), a lymphotropic alpha-herpesvirus associated with T-cell lymphomas in chickens, is an excellent model for herpesvirus biology and virus-induced oncogenesis. Marek's disease (MD) is also one of the cancers against which a vaccine was first used. In the lymphomas and lymphoblastoid cell lines (LCLs) derived from them, MDV establishes latent infection with limited gene expression. Although LCLs are valuable for interrogating viral and host gene functions, molecular determinants associated with the maintenance of MDV latency and lytic switch remain largely unknown, mainly due to the lack of tools for in situ manipulation of the genomes in these cell lines. Here we describe the first application of CRISPR/Cas9 editing approach for precise editing of the viral gene phosphoprotein 38 (pp38), a biomarker for latent/lytic switch in MDV-transformed LCLs MDCC-MSB-1 (Marek's disease cell line MSB-1) and MDCC-HP8. Contradictory to the previous reports suggesting that pp38 is involved in the maintenance of transformation of LCL MSB-1 cells, we show that pp38-deleted cells proliferated at a significant higher rate, suggesting that pp38 is dispensable for the transformed state of these cell lines. Application of CRISPR/Cas9-based gene editing of MDV-transformed cell lines in situ opens up further opportunities towards a better understanding of MDV pathogenesis and virus-host interactions.