Episomal vectors assembled from defined genetic components are a promising alternative to traditional gene therapy vectors that integrate in the host genome and may cause insertional mutations. The vector pEPI-eGFP is stably retained in the episomal state in cultured mammalian cells at low copy number for many generations without integration into the host genome. Although pEPI-eGFP is a fully engineered vector, little is known about how it interacts with the host genome and about the molecular mechanisms that are responsible for its transcriptional activity. We have analyzed the expression of the episomal reporter gene eGFP under conditions that affect the chromatin state of the genome. We have also constructed pEPI derivatives carrying a tandem array of lac operator sequences, which allows in vivo visualization and manipulation of the chromatin state of the episome. We show that changes in chromatin state of both the host and pEPI-eGFP induces changes in episomal gene activity and influences the episome’s nuclear distributions. We conclude that episomal genes are subject to control systems of the host, similarly to their counterparts in the host genome.