Whereas two key steps in cervical carcinogenesis are integration of high-risk human papillomavirus (HR-HPV) and acquisition of an unstable host genome, the temporal association between these events is poorly understood. Chromosomal instability is induced when HR-HPV E7 oncoprotein is overexpressed from heterologous promoters in vitro. However, it is not known whether such events occur at the "physiologically" elevated levels of E7 produced by deregulation of the homologous HR-HPV promoter after integration. Indeed, an alternative possibility is that integration in vivo is favored in an already unstable host genome. We have addressed these issues using the unique human papillomavirus (HPV) 16-containing cervical keratinocyte cell line W12, which was derived from a low-grade squamous intraepithelial lesion and thus acquired HPV16 by "natural" infection. Whereas W12 at low passage contains HPV16 episomes only, long-term culture results in the emergence of cells containing integrated HPV16 only. We show that integration of HPV16 in W12 is associated with 3' deletion of the E2 transcriptional repressor, resulting in deregulation of the homologous promoter of the integrant and an increase in E7 protein levels. We further demonstrate that high-level chromosomal instability develops in W12 only after integration and that the forms of instability observed correlate with the physical state of HPV16 DNA and the level of E7 protein. Whereas intermediate E7 levels are associated with numerical chromosomal abnormalities, maximal levels are associated with both numerical and structural aberrations. HR-HPV integration is likely to be a critical event in cervical carcinogenesis, preceding the development of chromosomal abnormalities that drive malignant progression.