The herpes simplex virus type 1 (HSV-1) immediate-early protein ICP27 is an essential regulatory protein that localizes to the nuclei of infected cells. The strong nuclear localization signal (NLS) of ICP27 was identified recently and shown to reside in the amino-terminal portion of the polypeptide from residues 110 to 137 (W.E. Mears, V. Lam, and S.A. Rice, J. Virol. 69:935-947, 1995). There are also two arginine-rich regions directly succeeding the NLS. The first of these arginine-rich sequences (residues 141 to 151), together with the NLS, has been shown by Mears et al. to form the nucleolar localization signal. Arginine-rich motifs are common in domains involved in nuclear localization and RNA binding. To analyze the role of the arginine-rich regions in ICP27, we constructed stably transformed cell lines containing ICP27 mutants with deletions of all or parts of the NLS and arginine-rich regions. We also constructed mutants in which these regions were replaced with heterologous NLSs or RNA-binding domains. Characterization of these mutants indicated that the arginine-rich regions were required but not sufficient for wild-type localization of ICP27. More importantly, the NLS and arginine-rich regions were also essential to the function of ICP27. Mutants lacking these sequences were defective in late gene expression during infection even when ICP27 was properly localized to the nucleus by substitution of the NLS from simian virus 40 large T antigen. Further, the defect in late gene expression could not be overcome by replacement with the highly basic RNA-binding domain of human immunodeficiency virus type 1 Tat. The deficiency in late gene expression was independent of ICP27's role in stimulating viral DNA replication. In addition, localization of the HSV-1 proteins ICP4, ICP0, and ICP8 was unaffected by ICP27 mutants in this region. These results suggest that the arginine-rich regions are required for efficient nuclear localization and for the regulatory activity of ICP27 involved in viral late gene expression.