The production of the human papillomavirus type 16 (HPV-16) is intimately tied to the differentiation of the host epithelium that it infects. Infection occurs in the basal layer of the epithelium at a site of wounding, where the virus utilizes the host DNA replication machinery to establish itself as a low-copy-number episome. The productive stage of the HPV-16 life cycle occurs in the postmitotic suprabasal layers of the epithelium, where the virus amplifies its DNA to high copy number, synthesizes the capsid proteins (L1 and L2), encapsidates the HPV-16 genome, and releases virion particles as the upper layer of the epithelium is shed. Papillomaviruses are hypothesized to possess a mechanism to overcome the block in DNA synthesis that occurs in the differentiated epithelial cells, and the HPV-16 E7 oncoprotein has been suggested to play a role in this process. To determine whether E7 plays a role in the HPV-16 life cycle, an E7-deficient HPV-16 genome was created by inserting a translational termination linker (TTL) in the E7 gene of the full HPV-16 genome. This DNA was transfected into an immortalized human foreskin keratinocyte cell line shown previously to support the HPV-16 life cycle, and stable cell lines were obtained that harbored the E7-deficient HPV-16 genome episomally, the state of the genome found in normal infections. By culturing these cells under conditions which promote the differentiation of epithelial cells, we found E7 to be necessary for the productive stage of the HPV-16 life cycle. HPV-16 lacking E7 failed to amplify its DNA and expressed reduced amounts of the capsid protein L1, which is required for virus production. E7 appears to create a favorable environment for HPV-16 DNA synthesis by perturbing the keratinocyte differentiation program and inducing the host DNA replication machinery. These data demonstrate that E7 plays an essential role in the papillomavirus life cycle.