To investigate E7-dependent biochemical changes which are involved in cellular transformation, we analyzed the influence of human papillomavirus type 16 (HPV-16) E7 on the expression of cell cycle regulatory proteins. Expression of E7 in established rodent fibroblasts (NIH 3T3), which was shown to be sufficient for transformation of these cells, leads to constitutive expression of the cyclin E and cyclin A genes in the absence of external growth factors. Surprisingly, expression of the cyclin D1 gene, which encodes a major regulator of G1 progression, is unaltered in E7-transformed cells. In transient transfection experiments, the cyclin A gene promoter is activated by E7 via an E2F binding site. In 14/2 cells, which were used as a model system to analyze the role of HPV-16 E7 in the transformation of primary cells, we observed rapid E7-dependent activation of cyclin E gene expression, which can be uncoupled from activation of the cyclin A gene, since the latter requires additional protein synthesis. E7-driven induction of cyclin E and cyclin A gene expression was accompanied by an increase in the associated kinase activities. Two domains of the E7 oncoprotein, which are designated cd1 and cd2, are essential for transformation of rodent fibroblasts. It is shown here that growth factor-independent expression of the cyclin E gene requires cd2 but not cd1, while activation of cyclin A gene expression requires cd1 function in addition to that of cd2. These data suggest that cyclin A gene expression is controlled by two distinct negative signals, one of which also restricts expression of the cyclin E gene. The ability of E7 to separately override each of these inhibitory signals, via cd1 and cd2, cosegregates with its ability to fully transform rodent fibroblasts. Unlike serum growth factors, E7 induces S-phase entry without activating cyclin D1 gene expression, in keeping with the finding that cyclin D1 function is not required in cells transformed by DNA tumor viruses.