The E2 open reading frame of human papillomavirus type 16 (HPV-16) encodes a DNA-binding protein which modulates papillomavirus transcription and replication. To investigate the biological and biochemical properties of the HPV-16 E2 protein, we have constructed recombinant baculoviruses which express the full-length molecule and individual N- and C-terminal domains in Sf21 insect cells. In this system the full-length E2 protein was phosphorylated and targeted to the insect cell nucleus. A 93 amino acid C-terminal fragment encompassing the DNA binding and dimerization functions of E2 was also translocated to the nucleus but was not modified by phosphorylation. The E2 N-terminal protein accumulated in the insect cell cytoplasm but was not efficiently phosphorylated. The formation of heterodimers between full-length and N-terminally truncated E2 species was observed when Sf21 cells were co-infected with recombinant viruses and when homodimers were mixed in vitro, suggesting that the dimer interface is not sufficiently stable to prevent subunit exchange in vivo. Both homo- and heterodimeric E2 species were able to bind specifically and in any combination to tandem E2 binding sites from the HPV-16 regulatory region. Furthermore, the HPV-16 E2 protein bound to DNA exhibited a distinct susceptibility profile to pronase digestion, potentially contrasting with that reported for BPV-1 E2. These observations suggest that significant structural and functional differences may exist between the BPV/HPV E2 proteins and have implications for understanding E2-dependent regulation of transcription and replication.