Congenital fibropapillomatosis of the gingiva and oral mucosa and epidermal hyperplasia of the lip are described, for the first time, in two newborn lambs. Expression of the E5 oncoprotein of bovine deltapapillomavirus types 2 (BPV-2) and -13 (BPV-13) was detected in both fibropapillomas and the hyperplastic epidermal cells suggesting the BPV infection was the cause of the proliferative lesions. No DNA sequences of BPV-1 and BPV-14 were detected. Both BPV-2 and BPV-13 DNA were also amplified from peripheral blood mononuclear cells (PBMCs) of the newborn lambs' dams. The concordance between BPV genotypes detected in the blood of dam and the oral and skin pathological samples of their offspring suggests that a vertical hematogeneous transmission was most likely source of BPV infection. Immunoblotting revealed the presence of E5 dimers allowing the viral protein to be biologically active. E5 dimers bind and activate the platelet derived growth factor β receptor (PDGFβR), a major molecular mechanism contributing to disease. The detection of E5 protein within the proliferating cells therefore adds further evidence that the BPV infection was the cause of the proliferative lesions seen in these lambs. This is the first evidence of vertical transmission of BPVs in sheep resulting in a clinical disease.