The 27-kDa Rex trans-acting protein appears to be essential for replication of human T-cell leukemia virus type I. Mutations introduced outside of the Rex RNA-binding domain-nucleolar localization signal display either wild-type activity or, conversely, yield dominant-negative proteins. We generated missense mutations in a particular domain of the Rex protein (amino acid residues 54 to 69) which is characterized by a cluster of dominant-negative mutants. Our results indicate that amino acids 57 to 67 are critically important for Rex function mediated through the RxRE cis-acting RNA sequence. Within this domain, only amino acids 61 to 63 could be mutated without loss of function. All other missense and deletion mutants yielded dominant-negative proteins. In vitro RNA-binding studies performed with glutathione S-transferase-Rex fusion proteins demonstrated that all of the mutant Rex proteins interacted specifically with RxRE RNA. Analysis of chimeric Rex-Rev proteins suggests that this Rex domain is important for oligomerization.