Infected cell polypeptide 27 (ICP27, alpha 27, IE63) is the 63-kilodalton product of an immediate-early gene of herpes simplex virus. Functional analysis of temperature-sensitive mutants in herpes simplex virus type 1 ICP27 demonstrated that this protein plays an essential role in virus replication (W. R. Sacks, C. C. Greene, D. P. Aschman, and P. A. Schaffer, J. Virol. 55:796-805, 1985). Because the temperature-sensitive forms of ICP27 induced by the mutants affected gene expression to differing degrees, these mutants were not suitable for establishing the ICP27 null phenotype. For this purpose we generated deletion mutants in ICP27--3dl1.2 and 5dl1.2--lacking the transcriptional start site as well as portions of the promoter and coding sequences of the gene. These mutants failed to specify ICP27-specific transcripts and proteins and were replication incompetent. The mutants induced the synthesis of greatly reduced levels of viral DNA (18% of wild-type levels) and were characterized by the overexpression of early proteins, reduced levels of gamma 1 proteins, and the absence of detectable gamma 2 proteins. The alterations in viral protein synthesis appeared to occur at the level of transcription. The phenotypic properties of the mutants were consistent with the results of transient expression assays demonstrating that ICP27 acts to down-regulate transcription of early genes and to further up-regulate transcription of late genes whose expression is induced by ICP0 and ICP4. Because ICP27 is not thought to be directly involved in viral DNA synthesis, it is likely that the reduced levels of viral DNA characteristic of deletion mutant-infected cells is a consequence of aberrant regulation of certain early genes whose products are involved in viral DNA synthesis and late genes whose products are required to stabilize viral DNA once synthesized. Taken together, these findings suggest an essential role for ICP27 in the modulation of early and late gene expression at the transcriptional level.