ICP22 is a multifunctional herpes simplex virus 1 (HSV-1) immediate early protein that functions as a general repressor of a subset of cellular and viral promoters in transient expression systems. Although the exact mechanism of repression remains unclear, this protein induces a decrease in RNA polymerase II Serine 2 (RNAPII Ser-2) phosphorylation, which is critical for transcription elongation. To characterize the mechanism of transcriptional repression by ICP22, we established an in vivo transient expression reporter system. We found that ICP22 inhibits transcription of the HSV-1 alpha, beta and gamma gene promoters. The viral tegument protein VP16, which plays vital roles in initiation of viral gene expression and viral proliferation, can overcome the inhibitory effect of ICP22 on alpha-gene transcription. Further immunoprecipitation studies indicated that both ICP22 and VP16 bind to positive transcription elongation factor b (P-TEFb) and form a complex with it in vivo. We extended this to show that P-TEFb regulates transcription of the viral alpha-gene promoters and affects transcriptional regulation of ICP22 and VP16 on the alpha-genes. Additionally, ChIP assays demonstrated that ICP22 blocks the recruitment of P-TEFb to the viral promoters, while VP16 reverses this blocking effect by recruiting P-TEFb to the viral alpha-gene promoters through recognition of the TAATGARAT motif. Taken together, our results suggest that ICP22 interacts with and blocks the recruitment of P-TEFb to viral promoter regions, which inhibits transcription of the viral gene promoters. The transactivator VP16 binds to and induces the recruitment of P-TEFb to viral alpha-gene promoters, which counteracts the transcriptional repression of ICP22 on alpha-genes by recruiting p-TEFb to the promoter region.