The rex gene of the type I human T-cell leukaemia virus (HTLV-I) encodes a phosphorylated nuclear protein of relative molecular mass 27,000 which is required for viral replication. The Rex protein acts by promoting the cytoplasmic expression of the incompletely spliced viral messenger RNAs that encode the virion structural proteins. To identify the biologically important peptide domains within Rex, we introduced a series of mutations throughout its sequence. Two distinct classes of mutations lacking Rex biological activity were identified. One class corresponds to trans-dominant repressors as they inhibit the function of the wild-type Rex protein. The second class of mutants, in contrast, are recessive negative, rather than dominant negative, as they are not appropriately targeted to the cell nucleus. These results indicate the presence of at least two functionally distinct domains within the Rex protein, one involved in protein localization and a second involved in effector function. The trans-dominant Rex mutants may represent a promising new class of anti-viral agents.