Human papillomavirus (HPV) DNAs are detected in most genital dysplasias and cancers, suggesting that these viruses perturb epithelial growth and differentiation. The E6 and E7 genes of HPV type 18 induce immortality in keratinocytes cultured from genital tract epithelia, and the immortal cell lines display aberrant squamous differentiation. To examine whether the E6 and E7 proteins directly alter keratinocyte growth and differentiation, high-titer recombinant retroviruses were constructed for efficient transfer and expression of HPV-18 genes E6, E6* and E7 in cultures of normal human keratinocytes. Infection with retroviruses encoding E6 and E7 stimulated cell proliferation, reduced the requirement for bovine pituitary extract and induced immortality. E6 and E7 also delayed but did not prevent the onset of terminal squamous differentiation. The magnitude of effects on growth and differentiation of cultured cells was directly related to levels of E7 protein expression. Thus, expression of the HPV-18 E6 and E7 genes stimulates cell proliferation and delays differentiation of keratinocytes in vitro.