Human T-cell leukaemia viruses (HTLVs) have genomic organization distinct from that of other replication-competent retroviruses, possessing four genes, gag, pol, env and chi. The unique fourth gene, chi (also referred to as lor), is located between env and the 3' long terminal repeat (LTR), encoding a protein of relative molecular mass 40,000 for HTLV-I and 37,000 for HTLV-II, located in the nucleus of infected cells. HTLV-I is the causative agent of adult T-cell leukaemia (ATL), a T-lymphocyte malignancy, while HTLV-II has been found associated with a T-cell variant of hairy cell leukaemia. Both viruses immortalize T cells in vitro. However, the mechanism of cellular transformation induced by HTLV is not known as there seems to be no common site of provirus integration in primary ATL cells and the virus contains no classical oncogene sequences. These observations have provoked speculation that the unique and strongly conserved chi protein (85% amino-acid homology between HTLV-I and -II) is involved in HTLV leukaemogenesis. Recent mutagenesis experiments in our laboratory have shown that the chi gene is essential for HTLV replication. It has also has been shown that the LTRs of HTLV and the related bovine leukaemia virus (BLV) are activated in trans in virus-infected cells, and, although such experiments did not directly demonstrate a role for the chi protein in transcriptional activation, it has been suggested that the chi protein is responsible for the transcriptional activation of the LTR and may be involved in cellular transformation. We have now developed a transient co-transfection assay which demonstrates that transcriptional activation of the HTLV LTR is mediated solely by the chi protein and that no other virus genes are required.