Adenovirus protein VII is the major protein component of the viral nucleoprotein core. It is a nonspecific DNA-binding protein that condenses viral DNA inside the capsid. Protein VII remains associated with viral chromatin throughout early phase, indicating its continuing role during infection. Here we characterize the release of protein VII from infectious genomes during a time period that corresponds to the late phase of infection. Interestingly, the early viral transactivator E1A, but not other early gene products, is responsible for releasing protein VII by a mechanism that requires ongoing transcription but not viral DNA replication. Moreover transcription per se, in the absence of E1A, is also sufficient to trigger release. Accordingly, a recombinant genome containing only non-coding "stuffer" DNA is unable to support release of protein VII. Our data support a model in which early gene transcription results in a change in the structure of the viral chromatin.