The genetic analysis of the papillomaviruses has been hampered by the lack of mutants conditionally defective for viral biological activities. We report here the construction and characterization of a temperature-sensitive papillomavirus mutant. The mutation is predicted to insert the sequence Pro-Arg-Ser-Arg into the N-terminal half of the bovine papillomavirus type 1 (BPV1) ORF E2 protein, the major viral regulatory protein. The cloned mutant viral DNA displays temperature-sensitive defects in the induction of focus formation in mouse C127 cells, in its establishment as an extrachromosomal plasmid and in transactivation of a BPV1 enhancer. Genetic experiments confirm that this pleiotropic phenotype is caused by the insertion mutation in ORF E2 and that the transformation and replication defects of the mutant at 37 degrees C are corrected in trans by wild-type E2 gene activity. Most cell lines stably transformed by the mutant at 32.5 degrees C display a reduced ability to overgrow a monolayer of normal cells following temperature shift to 37 degrees C and the mutant viral DNA after temperature shift is present in decreased copy number and/or in an integrated state. These results provide strong genetic evidence that continued ORF E2 activity is required for maintenance of BPV1-induced transformation and for normal viral DNA replication.