Transcriptional regulation of the human telomerase reverse transcriptase (hTERT) gene is a critical step in transformation and differentiation. Human papillomavirus (HPV) E2 protein inhibits cell growth in HPV-infected cells and triggers apoptosis in HeLa cells. Since E2 induces cell growth suppression and senescence, we hypothesize that the protein may modulate cellular gene expression related to these processes. In this report, we demonstrate that E2 inhibits the hTERT promoter. Mapping of the E2-responsive region of hTERT promoter reveals that Sp1 is important for E2-mediated repression of this promoter. Site-directed mutagenesis data on the hTERT promoter show that E2 does not abolish E-Box mediated transcription, and represses promoter activity via the Sp1 binding site. Furthermore, chromatin immunoprecipitation assays indicate that E2 is actively recruited to the hTERT promoter region via Sp1 in vivo. Our findings provide novel insights into the biological function of human papillomavirus E2 protein.