Marek's Disease Virus (MDV) is an alphaherpesvirus that infects chickens, transforms CD4+ T cells and causes deadly lymphomas. In addition, MDV induces immunosuppression early during infection by inducing cell death of the infected lymphocytes, and potentially due to activation of regulatory T (Treg)-cells. Furthermore, immunosuppression also occurs during the transformation phase of the disease; however, it is still unknown how the disease can suppress immune response prior or after lymphoma formation. Here, we demonstrated that chicken TGF-beta+ Treg cells are found in different lymphoid tissues, with the highest levels found in the gut-associated lymphoid tissue (cecal tonsil: CT), fostering an immune-privileged microenvironment exerted by TGF-beta. Surprisingly, significantly higher frequencies of TGF-beta+ Treg cells are found in the spleens of MDV-susceptible chicken lines compared to the resistant line, suggesting an association between TGF-beta+ Treg cells and host susceptibility to lymphoma formation. Experimental infection with a virulent MDV elevated the levels of TGF-beta+ Treg cells in the lungs as early as 4 days post infection, and during the transformation phase of the disease in the spleens. In contrast to TGF-beta+ Treg cells, the levels of CD4+CD25+ T cells remained unchanged during the infection and transformation phase of the disease. Furthermore, our results demonstrate that the induction of TGF-beta+ Treg cells is associated with pathogenesis of the disease, as the vaccine strain of MDV did not induce TGF-beta+ Treg cells. Similar to human haematopoietic malignant cells, MDV-induced lymphoma cells expressed high levels of TGF-beta but very low levels of TGF-beta receptor I and II genes. The results confirm that COX-2/ PGE2 pathway is involved in immunosuppression induced by MDV-lymphoma cells. Taken together, our results revealed a novel TGF-beta+ Treg subset in chickens that is activated during MDV infection and tumour formation.