The function of the E5 protein of human papillomaviruses (HPV) is not well characterized, and controversies exist about its role in the viral life cycle. To determine the function of E5 within the life cycle of HPV type 31 (HPV31) we first constructed HPV31 mutant genomes that contained an altered AUG initiation codon or stop codons in E5. Cell lines were established which harbored transfected wild-type or E5 mutant HPV31 genomes. These cell lines all maintained episomal copies of HPV31 and revealed similar phenotypes with respect to growth rate, early gene expression, and viral copy number in undifferentiated monolayer cultures. Following epithelial differentiation, genome amplification and differentiation-dependent late gene expression were observed in mutant cell lines, but at a rate significantly reduced from that observed in cells containing the wild-type genomes. Organotypic raft cultures indicated that E5 does not effect the expression of differentiation markers but does reduce expression of late viral proteins. Western analysis and immunofluorescence staining for cyclins during epithelial differentiation revealed a decreased expression of cyclin A and B in E5 mutant cells compared to HPV wild-type cells. Using a replating assay, a significant reduction in colony-forming ability was detected in the absence of E5 expression when cells containing wild-type or E5 mutant HPV genomes were allowed to proliferate following 24 h in suspension-induced differentiation. This suggests that HPV E5 modifies the differentiation-induced cell cycle exit and supports the ability of HPV31-positive keratinocytes to retain proliferative competence. In these studies, E5 was found to have little effect on the levels of the epidermal growth factor receptor (EGFR) or on its phosphorylation status. This indicates that EGFR is not a target of E5 action. Our results propose a role for high risk HPV E5 in modulation of late viral functions through activation of proliferative capacity in differentiated cells. We suspect that the primary target of E5 is a membrane protein or receptor that then acts to alter the levels or activities of cell cycle regulators.