The E6-E7 region of human papillomavirus types 16 and 18 is selectively retained and expressed in cervical carcinoma cells. In cultured human keratinocytes, expression of the E6 and E7 open reading frames of human papillomavirus type 18, under the control of its homologous promoter, resulted in high-frequency immortalization. Furthermore, by using a system that allows for stratification of keratinocytes in vitro (raft system), we observed that the morphological differentiation of these E6-E7 immortalized cells was altered such that parabasal cells extended throughout most of the epithelium, with abnormal nuclei present in the upper regions. Examination of E6-E7-expressing cell lines in the raft system at a later passage revealed that complete loss of morphological differentiation had occurred. E7 alone was a much less effective immortalizing agent than E6 and E7 together and acted only minimally to alter morphological differentiation in vitro. No such activities were found for E6 alone. High-frequency transformation of human epithelial cells thus appears to require expression of both E6 and E7 gene products.