This study investigates the occurrence of erythematous lip lesions in a captive sun bear population in Cambodia, including the progression of cheilitis to squamous cell carcinoma, and the presence of Ursid gammaherpesvirus 1. Visual assessment conducted in 2015 and 2016 recorded the prevalence and severity of lesions. Opportunistic sampling for disease testing was conducted on a subset of 39 sun bears, with histopathological examination of lip and tongue biopsies and PCR testing of oral swabs and tissue biopsies collected during health examinations. Lip lesions were similarly prevalent in 2015 (66.0%) and 2016 (68.3%). Degradation of lip lesion severity was seen between 2015 and 2016, and the odds of having lip lesions, having more severe lip lesions, and having lip lesion degradation over time, all increased with age. Cheilitis was found in all lip lesion biopsies, with histological confirmation of squamous cell carcinoma in 64.5% of cases. Single biopsies frequently showed progression from dysplasia to neoplasia. Eighteen of 31 sun bears (58.1%) had at least one sample positive for Ursid gammaherpesvirus 1. The virus was detected in sun bears with and without lip lesions, however due to case selection being strongly biased towards those showing lip lesions it was not possible to test for association between Ursid gammaherpesvirus 1 and lip squamous cell carcinoma. Given gammaherpesviruses can play a role in cancer development under certain conditions in other species, we believe further investigation into Ursid gammaherpesvirus 1 as one of a number of possible co-factors in the progression of lip lesions to squamous cell carcinoma is warranted. This study highlights the progressively neoplastic nature of this lip lesion syndrome in sun bears which has consequences for captive and re-release management. Similarly, the detection of Ursid gammaherpesvirus 1 should be considered in pre-release risk analyses, at least until data is available on the prevalence of the virus in wild sun bears.