To examine the biological properties of the bovine papillomavirus type 1 (BPV) and human papillomavirus type 16 (HPV16) E5 genes, each was cloned separately into a retroviral expression vector and helper-free recombinant viruses were generated in packaging cell lines. The BPV E5 retroviruses efficiently caused morphologic and tumorigenic transformation of cultured lines of murine fibroblasts, whereas the HPV16 E5 viruses were inactive in these assays. In contrast, infection of the p117 established line of murine epidermal keratinocytes with either the BPV or the HPV16 E5 retrovirus resulted in the generation of tumorigenic cells. Pam212 murine keratinocytes were also transformed to tumorigenicity by the HPV16 E5 gene but not by the gene carrying a frameshift mutation. These results establish that the HPV16 E5 gene is a transforming gene in cells related to its normal host epithelial cells.