The DNA fragments of the 5' and 3' halves of the putative env gene predicted from the DNA sequence of human T-cell leukemia virus (HTLV) provirus were inserted into expression vectors pORF2 and pORF1, respectively, and two hybrid proteins composed of env polypeptides and beta-galactosidase were efficiently produced in Escherichia coli. The hybrid proteins containing the NH2-terminal (EH9) and COOH-terminal (EA1) halves were both immunologically reactive with sera from adult T-cell leukemia patients, demonstrating the utility of the hybrid proteins for diagnosis of HTLV infection. Rabbit antisera against these hybrid proteins detected the two glycoproteins gp62 and gp46, which were previously identified as HTLV env gene products. With these rabbit antisera, two properties of the env gene products were studied. (i) The antisera inhibited syncytia formation of cat S+L- cells induced by HTLV, suggesting that one or both of the env gene products of HTLV, gp62 and gp46, are involved in induction of cell fusion. (ii) The env product gp62 or gp46 or both products are exposed on the surface of HTLV-infected cells and might modulate the proliferation of HTLV-infected T cells in the host because the antisera against the hybrid proteins were cytotoxic on HTLV-producing cell lines. The latter conclusion also is supported by the fact that adult T-cell leukemia patients and healthy HTLV carriers have antibodies to the env gene products.