VP16 is a herpes simplex virus (HSV)-encoded transcriptional activator protein that is essential for efficient viral replication and as such may be a target for novel therapeutic agents directed against viral gene expression. We have reconstituted transcriptional activation by VP16 in an in vitro system that is dependent on DNA sequences from HSV immediate-early gene promoters and on protein-protein interactions between VP16 and Oct-i that are required for VP16 activation in vivo. Activation increased synergistically with the number of TAATGARAT elements (the cis-acting element for VP16 activation in vivo) upstream of the core promoter, and mutations of this element that reduce Oct-I or VP16 DNA binding reduced transactivation in vitro. A VP16 insertion mutant unable to interact with Oct-1 was inactive, but, surprisingly, a deletion mutant lacking the activation domain was -65% as active as the full-length protein. The activation domains of Oct-1 were necessary for activation in reactions containing the VP16 deletion mutant, and they contributed significantly to activation by full-length VP16. Addition of a GA-rich element present in many HSV immediate-early gene enhancers synergistically stimulated VP16-activated transcription. Finally, oligopeptides that are derived from a region of VP16 thought to contact a cellular factor known as HCF (host cell factor) and that inhibit efficient VP16 binding to the TAATGARAT element also specifically inhibited VP16-activated, but not basal, transcription. Amino acid substitutions in one of these peptides identified three residues that are absolutely required for inhibition and presumably for interaction of VP16 with HCF.Herpes simplex virus type 1 (HSV-1) and HSV-2 package a protein, VP16, also known as Vmw65 or a-TIF, that activates transcription of the viral immediate-early (IE) genes and is essential for efficient virus replication (1,2,7,13,24,61). Two features of this 65-kDa protein have made it the object of much interest in the study of eukaryotic gene regulation. Its highly acidic C-terminal activation domain, which is absolutely required for IE gene activation in vivo (22,59,62), is one of the most potent known and has been fused to heterologous DNA binding domains to create novel transactivators for both in vivo and in vitro studies (8,10,50). Investigations of wild-type and mutant forms of this domain have begun to shed light on its key structural features (14,17,22,49,59,62). Despite such intensive study, the mechanism of action of this prototypic activation domain-whether it acts directly on a basal transcription factor (27,39,40,57) proteins, Oct-1 and HCF (host cell factor; also known as Cl factor, VCAF, or CFF), which direct its binding to a sequence element, the TAATGARAT motif, found in all HSV-1 IE enhancers (20,23,29,32,33,46,56 TAATGARAT element. Although Oct-I and VP16 can form a low-affinity ternary complex with TAATGARAT (32,55,56), HCF stimulates complex formation by several orders of magnitude (32). HCF has no apparent sequence-specific DNA binding...