The human papillomavirus type 16 E5 protein (HPV16 E5) is 83 amino acids in length and contains three well-defined hydrophobic regions. The protein is expressed at very limited amounts in transfected cells and the absence of specific antibodies has strongly hampered functional analyses. To investigate the relationship between structure and function we have synthesized a codon-adapted version of the gene (hE5) and prepared a series of N-terminal and C-terminal deletions. Immunofluorescence analyses show colocaliation of the protein with calnexin, an ER marker, EEA-1, an early endosomes marker, and Lamp-2, a lysosomal marker. No major colocalization was found between hE5 and the Golgi marker 58 K. Whereas deletions at the C-terminal end of the protein do not greatly alter the localisation pattern, deletion of the first hydrophobic region results in loss of colocalisation with the ER, early endosomes and lysosomes. Further, we show that while the complete E5 protein confers to HaCaT cells the property to grow in an anchorage-independent manner, deletion of the first hydrophobic region results in loss of growth in soft agar. We conclude that the first hydrophobic region of the E5 protein largely determines the biological properties of the viral protein.