The E7 oncogene is an essential tool used by papillomaviruses to interfere with the cell cycle and cellular differentiation. We investigated the effects of E7 expression on both cellular functions in skeletal muscle cells, a terminally differentiating system. When expressed in myoblasts, E7 impaired differentiation only partially, but allowed continuation of DNA synthesis during and after differentiation. Surprisingly, E7 expression in terminally differentiated myotubes could not reactivate DNA synthesis even though the oncogene bound the retinoblastoma protein, reduced its levels, and increased E2F transcriptional activity. Despite the high cyclin E protein levels induced by E7, the myotubes remained devoid of cyclin E-associated kinase activity. Enforcement of such activity in the presence of E7 brought myotubes into S phase. These results show that E7, unlike other DNA tumor-virus oncogenes, cannot reactivate the cell cycle in postmitotic myotubes. In contrast, E7 allows significant differentiation to occur in the presence of persisting DNA synthesis. These observations distinguish E7 from other functionally related oncogenes and bear significance for the understanding of the natural life cycle of human papillomaviruses. The fact that E7 alone inhibits the initiation but not the maintenance of the postmitotic state indicates that the mechanisms underlying these two functions are at least partially distinct.