The E8 open reading frame of Bovine papillomavirus type 4 (BPV-4) encodes a small (42 amino acid) hydrophobic polypeptide localized to cellular membranes and capable of conferring an anchorage-independent (AI) growth phenotype on primary bovine cells co-transfected with BPV-4 E7 ORF and an activated ras gene. To further study the function of E8 independently of other viral gene products, we have expressed it in the murine ®broblast cell line, NIH3T3. Cells expressing E8 are capable of AI growth and escape growth arrest after serum withdrawal. E8 deregulates cyclin A expression, induces transactivation of the human cyclin A gene promoter and increases endogenous protein levels in cells maintained in short-term suspension culture and in lowserum (LS). Both these culture conditions promote downregulation of cyclin A in control cells. In LS growth conditions E8 permits sustained cyclin A-associated kinase activity but not cyclin E-cdk2 activity. Cyclin A-cdk2 activity and, in part, cyclin A gene expression are regulated by the cdk inhibitor p27 Kip1 . Expression of this cdk inhibitor is also de-regulated in E8 cells, with high levels being detected under all culture conditions tested. These data suggest that the ability of BPV-4 E8 to transform NIH3T3 cells is associated with upregulation of cyclin A-associated kinase activity and de-regulated expression of the cdk inhibitor p27 Kip1 and does not rely on down-regulation of p27 Kip1 expression. Analysis of E8 mutants indicate that the hydrophilic tail' of the molecule (residues 31 ± 42) is required for cell transformation, as assessed by anchorage-independent growth, while a form of E8 with expression restricted to the Endoplasmic Reticulum/cis-Golgi membranes by addition of a`KDEL' retention signal revealed that the sub-cellular localization is an important determinant of E8 biological activity.