Covalent histone modifications constitute a complex network of transcriptional regulation involved in diverse biological processes ranging from stem cell differentiation to immune response. The advent of modern sequencing technologies enables one to query the locations of histone modifications across the genome in an efficient manner. However, inherent biases in the technology and diverse enrichment patterns complicate data analysis. Marek's disease (MD) is an acute, lymphoma-inducing disease of chickens with disease outcomes affected by multiple host and environmental factors. Inbred chicken lines 6₃ and 7₂ share the same major histocompatibility complex haplotype, but have contrasting responses to MD. This dissertation presents novel methods for analysis of genome-wide histone modification data and application of new and existing methods to the investigation of epigenetic effects of MD on these lines. First, we present WaveSeq, a novel algorithm for detection of significant enrichments in ChIP-Seq data. WaveSeq implements a distribution-free approach by combining the continuous wavelet transform with Monte Carlo sampling techniques for effective peak detection. WaveSeq outperformed existing tools particularly for diffuse histone modification peaks demonstrating that restrictive distributional assumptions are not necessary for accurate ChIP-Seq peak detection. Second, we investigated latent MD in thymus tissues by profiling H3K4me3 and H3K27me3 in infected and control birds from lines 6₃ and 7₂. Several genes associated with MD, e.g. MX1 and CTLA–4, along with those linked with human cancers, showed line-specific and condition-specific enrichments. One of the first studies of histone modifications in chickens, our work demonstrated that MD induced widespread epigenetic variations. Finally, we analyzed the temporal evolution of histone modifications at distinct phases of MD progression in the bursa of Fabricius. Genes involved in several important pathways, e.g. apoptosis and MAPK signaling, and various immune-related miRNAs showed differential histone modifications in the promoter region. Our results indicated heightened inflammation in the susceptible line during early cytolytic MD, while resistant birds showed recuperative symptoms during early MD and epigenetic silencing during latent infection. Thus, although further elucidation of underlying mechanisms is necessary, this work provided the first definitive evidence of the epigenetic effects of MD.