Transient expression assays have shown that the varicella-zoster virus (VZV) open-reading frame (ORF) 29 gene product can act as a modulator of VZV gene expression. The ORF 29 protein alone does not appear to have any effect on transcription; however, in its presence, changes in the level of reporter gene activity mediated by the VZV immediate early (IE) 62 major transactivator are seen. Increased expression was observed in human fibroblasts, MeWo cells, HeLa cells, and T cells. In contrast, the presence of the ORF 29 protein results in a down-regulation of IE62 activation in PC-12 rat neuronal cells. Competition filter binding assays indicate that the ORF 29 protein binds specifically to the glycoprotein I promoter. Since transcripts for ORF 29 and ORF 62 have been detected in latently infected ganglia, the gene regulatory properties of the ORF 29 protein may be relevant to maintenance or establishment of VZV latency.