The varicella-zoster virus (VZV) genome has unique long (U(L)) and unique short (U(S)) segments which are flanked by internal repeat (IR) and terminal repeat (TR) sequences. The immediate-early 62 (IE62) protein, encoded by open reading frame 62 (ORF62) and ORF71 in these repeats, is the major VZV transactivating protein. Mutational analyses were done with VZV cosmids generated from parent Oka (pOka), a low-passage clinical isolate, and repair experiments were done with ORF62 from pOka and vaccine Oka (vOka), which is derived from pOka. Transfections using VZV cosmids from which ORF62, ORF71, or the ORF62/71 gene pair was deleted showed that VZV replication required at least one copy of ORF62. The insertion of ORF62 from pOka or vOka into a nonnative site in U(S) allowed VZV replication in cell culture in vitro, although the plaque size and yields of infectious virus were decreased. Targeted mutations in binding sites reported to affect interaction with IE4 protein and a putative ORF9 protein binding site were not lethal. Single deletions of ORF62 or ORF71 from cosmids permitted recovery of infectious virus, but recombination events repaired the defective repeat region in some progeny viruses, as verified by PCR and Southern hybridization. VZV infectivity in skin xenografts in the SCID-hu model required ORF62 expression; mixtures of single-copy recombinant Oka Delta 62 (rOka Delta 62) or rOka Delta 71 and repaired rOka generated by recombination of the single-copy deletion mutants were detected in some skin implants. Although insertion of ORF62 into the nonnative site permitted replication in cell culture, ORF62 expression from its native site was necessary for cell-cell spread in differentiated human skin tissues in vivo.