During human cytomegalovirus (HCMV) infection, the periphery of promyelocytic leukemia protein (PML)-associated nuclear bodies (also known as PML oncogenic domains [PODs] or ND10) are sites for both input viral genome deposition and immediate-early (IE) gene transcription. At very early times after infection, the IE1 protein localizes to and subsequently disrupts PODs, whereas the IE2 protein localizes within or adjacent to PODs. This process appears to be required for efficient viral gene expression and DNA replication. We have investigated the initiation of viral DNA replication compartment formation by studying the localization of viral IE proteins, DNA replication proteins, and the PML protein during productive infection. Localization of IE2 adjacent to PODs between 2 and 6 h after infection was confirmed by confocal microscopy of human fibroblasts (HF cells) infected with both wild-type HCMV(Towne) and with an IE1-deletion mutant HCMV(CR208) that fails to disrupt PODs. In HCMV(Towne)-infected HF cells at 24 to 48 h, IE2 also accumulated in newly formed viral DNA replication compartments containing the polymerase processivity factor (UL44), the single-stranded DNA binding protein (SSB; UL57), the UL112-113 accessory protein, and newly incorporated bromodeoxyuridine (BrdU). Double labeling of the HCMV(CR208)-infected HF cells demonstrated that formation of viral DNA replication compartments initiates within granular structures that bud from the periphery of some of the PODs and subsequently coalesce into larger structures that are flanked by PODs. In transient DNA transfection assays, both the N terminus (codons 136 to 290) and the C terminus (codons 379 to 579) of IE2 exon 5, but not the central region between them, were found to be necessary for both the punctate distribution of IE2 and its association with PODs. Like IE2, the UL112-113 accessory replication protein was also distributed in a POD-associated pattern in both DNA-transfected and virus-infected cells beginning at 6 h. Furthermore, when all six replication core machinery proteins (polymerase complex, SSB, and helicase-primase complex) were expressed together in the presence of UL112-113, they also accumulated at POD-associated sites, suggesting that the UL112-113 protein (but not IE2) may play a role in recruitment of viral replication fork proteins into the periphery of PODs. These results show that (i) subsequent to accumulating at the periphery of PODs, IE2 is incorporated together with the core proteins into viral DNA replication compartments that initiate from the periphery of PODs and then grow to fill the space between groups of PODs, and (ii) the UL112-113 protein appears to have a key role in assembling and recruiting the core replication machinery proteins in the initial stages of viral replication compartment formation.