Expression of the human papillomavirus (HPV) capsid genes, L1 and L2, as well as amplification of viral DNA and virion assembly occur in the terminally differentiated layers of infected stratified squamous epithelium in vivo. These processes can be duplicated in the laboratory through the use of organotypic or raft cultures. When CIN612 cells, which contain episomal copies of the high-risk HPV type 31b, are allowed to differentiate in raft cultures, the expression of transcripts encoding the early genes E1--E4 and E5 is induced. These transcripts are initiated at the differentiation-dependent P742 promoter located in the middle of the E7 open reading frame. Exposure of raft cultures to activators of protein kinase C, such as phorbol esters, results in the further induction of late gene expression as well as virion assembly. In this study, we have investigated the mechanism by which activators of protein kinase C induce late gene expression. The major L1 transcript was found to be encoded by a bicistronic E1--E4, L1 RNA which initiated at the differentiation-dependent promoter P742. Additional low-level expression of L1-containing RNAs was also observed from the early-region promoter, P97. The major L2 transcripts were found to be encoded by E1--E4, E5, L2, L1 RNAs which were also initiated in the early region, probably at the differentiation-specific promoter P742. While early and late RNAs were found to be expressed from the same promoter, they differed in utilization of splicing and polyadenylation sites. Raft cultures treated with activators of protein kinase C induced expression of late genes, but no change in the abundance of early RNAs initiated at the P742 promoter was observed. Thus, the increase in late gene expression was likely due to changes in RNA processing or stabilization rather than an increase in the rate of transcription from P742. Regulation of HPV late gene expression therefore occurs at two levels: differentiation-dependent induction of the P742 promoter, which can be mimicked in vitro by growth in raft cultures, and posttranscriptional changes that can be induced by activation of protein kinase C. These posttranscriptional changes may occur through inactivation or down-regulation of splicing factors which inhibit use of the late region polyadenylation site, resulting in increased stability of late region transcripts.