The high risk human papillomaviruses (HPVs) are associated etiologically with the majority of human cervical carcinomas. These HPVs encode two viral oncoproteins, E6 and E7, which are expressed consistently in cervical cancers. The function of these viral oncoproteins during a productive infection is to ensure viral replication in cells that have normally withdrawn from the cell division cycle and are committed to terminal differentiation. Expression of the E7 oncoprotein has been shown to lead to the abrogation of various negative growth regulatory signals, including a p53-mediated G1 growth arrest, TGFbeta-mediated growth inhibition, and quiescence of suprabasal keratinocytes. Here we describe a novel mechanism by which E7 can uncouple cellular proliferation and differentiation. In contrast to normal, differentiating keratinocytes, HPV-16 E7-expressing keratinocytes show delayed cellular differentiation and elevated cdk2 kinase activity despite high levels of p21(Cip1) and association of p21(Cip1) with cdk2. We show that the HPV E7 protein can interact with p21(Cip1) and abrogate p21(Cip1)-mediated inhibition of cyclin A and E-associated kinase activities. Based on these findings, we propose that this capacity of the HPV E7 oncoprotein to overcome p21(Cip1)-mediated inhibition of cdk2 activity during keratinocyte differentiation contributes to the ability of E7 to allow for cellular DNA synthesis in differentiated keratinocytes.