The human papillomavirus type 18 E1 and E2 proteins are both required for the initiation of viral DNA replication. Whereas E2 is the major viral transcription regulator, E1 is the replication initiator protein. They interact with each other and with the origin sequences to initiate viral DNA replication. We show that the HPV18 E1 and E2 proteins, when bound to an origin sequence cloned upstream of a heterologous promoter, synergistically activate transcription. This synergy required binding of E2 to at least two binding sites, but was partially independent of E1 binding to the origin of replication. Transcriptional activation was observed even in the absence of replication of the target DNA. Only homologous E1 and E2 proteins binding to homologous origin sequences from BPV1 or HPV18 viruses could synergistically activate transcription. We show that the HPV18 E1 protein can activate transcription when targeted to the DNA by fusion of the complete polypeptide with the BPV1 E2 C-terminus dimerization/DNA binding domain, implying that HPV18 E1 is an intrinsic transcriptional activator, though less potent than E2. The interaction between E1 and E2 may form a transcriptionally active complex during initiation of viral DNA replication.