Wild-type PML and at least four other novel proteins are localized within discrete nuclear structures known as PODs. We demonstrate here that during adenovirus infection, immediate early viral proteins from the E1 and E4 transcription units associate with the POD, which in turn undergoes a dramatic morphological change. During this process, the auto-antigen Sp-100 and NDP55 but not PML, relocate from the POD to the viral inclusion bodies, the sites of adenovirus DNA replication and late RNA transcription. The E4-ORF3 11-kD protein alone will induce this reorganization and reciprocally, viruses carrying mutations in the E4-domain fail to do so. These same viral mutants are defective in viral replication as well as the accumulation of late viral mRNAs and host cell transcription shutoff. We show that interferon (INF) treatment enhances the expression of PML, reduces or blocks PODs reorganization, and inhibits BrdU incorporation into viral inclusion bodies. In addition, cell lines engineered to overexpress PML prevent PODs from viral-induced reorganization and block or severely delay adenovirus replication. These results suggest that viral replication relies on components of the POD and that the structure is a target of early viral proteins.