The bovine papillomavirus (BPV) type 1 E5 gene encodes a 44-amino-acid protein that can stably transform cultured rodent cells when expressed in the absence of all other viral genes. We have previously constructed a BPV-simian virus 40 recombinant virus (Pava-1) which efficiently expresses the BPV type 1 E5 gene in infected cells (J. Settleman and D. DiMaio, Proc. Natl. Acad. Sci. USA 85:9007-9011, 1988). Within 48 h of Pava-1 infection, the vast majority of mouse C127 cells underwent a dramatic morphologic transformation which was accompanied by cell proliferation. Infection of C127 cells made quiescent by contact inhibition and serum starvation caused a great induction of cellular DNA synthesis. These morphologic and mitogenic responses were proportional to the virus multiplicity of infection. Mutational analysis indicated that the E5 gene is both necessary and sufficient for these activities. Analysis of a variety of E5 missense mutants revealed a strong correlation between their phenotypes in the acute transformation assays following infection and in the stable focus-forming assay following transfection. Most of the defective mutants expressed normal levels of E5 protein following infection, indicating that their defective phenotypes are not due to the synthesis of an unstable protein. The failure to genetically resolve these E5 activities suggests that the ability of the E5 protein to cause acute morphologic transformation and reentry into the cell cycle may be intimately related to its ability to cause stable cell transformation and that these functions are probably mediated by a single biochemical activity of the E5 protein.