Antigen presenting cells (APCs) in skin can promote either antigen-specific effector functions or antigen tolerance, and thus determine clearance or persistence of cutaneous viral infections. Human papillomavirus (HPV) infections can persist in squamous epithelium in immunocompetent individuals, and some persisting HPV infections, particularly with HPV16, promote malignant epithelial transformation. Here, we investigate whether local expression of the HPV16 protein most associated with malignant transformation, HPV16-E7, affects the phenotype and function of APC subsets in the skin. We demonstrate an expanded population of Langerhans cells in HPV16-E7 transgenic skin with distinct cell surface markers which express immune-modulatory enzymes and cytokines not expressed by cells from non transgenic skin. Furthermore, HPV16-E7 transgene expression in keratinocytes attracts new APC subsets to the epidermis. In vivo migration and transport of antigen to the draining lymph node by these APCs is markedly enhanced in HPV16-E7 expressing skin, whereas antigen-processing, as measured by proteolytic cleavage of DQ-OVA and activation of T cells in vivo by APCs, is significantly impaired. These data suggest that local expression of HPV16-E7 in keratinocytes can contribute to persisting infection with this oncogenic virus, by altering the phenotype and function of local APCs.