The papillomavirus E2 gene product plays a pivotal role in viral replication. E2 has multiple functions, including (i) transcriptional activation and repression of viral promoters and (ii) the enhancement of viral DNA replication. It was previously reported that E2 suppressed the growth of papillomavirus-positive cervical carcinoma cell lines. In the present study, we investigated the mechanisms of E2 growth inhibition. We found that the transcriptional activation function of E2 is required for inhibition of the growth of HeLa cells as well as for transcriptional repression of the viral E6/E7 promoter. It had been previously postulated that transcriptional repression of the E6/E7 promoter results from E2 binding its cognate sites proximal to the E6/E7 promoter and displacing other cellular transcriptional factors. In this study, we report a requirement for the transcription activation function for the binding of E2 to transcriptionally active templates.