We have examined transcription from the SV40 late promoter in vitro and in vivo. In HeLa whole cell extracts, late transcription is efficient in the absence of T antigen but is impaired by enhancer specific point mutations. In vivo, when replication is prevented, transcription from the late promoter requires T antigen as well as a functional enhancer. However, enhancer sequences fail to potentiate late transcription from replicating templates although, under such conditions, enhancer binding factors do not become limiting. It appears that the SV40 late transcription unit is refractory to enhancer-mediated activation when it is located on a replicating template.