The human endogenous retrovirus-K113 (HERV-K113) is the most complete HERV known to date. It contains open reading frames for all viral proteins. Depending on ethnicity, up to 30% of the human population carries the provirus on chromosome 19. To facilitate molecular and functional studies, we have cloned the HERV-K113 sequence into a small plasmid vector and characterized its functional properties. Here we show that based on a substantial LTR-promoter activity, full length messenger RNA and spliced env-, rec- and 1.5 kb (hel)-transcripts are produced. The envelope protein of HERV-K113 is synthesized as an 85 kDa precursor that is found partially processed. The accessory Rec protein is highly expressed and accumulates in the nucleus. Expression analysis revealed synthesis of the Gag precursor and the protease. However, the cloned HERV-K113 provirus is not replication competent. It carries inactivating mutations in the reverse transcriptase gene. These mutations can be reversed to reconstitute the active enzyme, but the reversion is not sufficient to reconstitute replication capacity of the virus.