The expression of Moloney murine leukemia virus and vectors derived from it is restricted in undifferentiated mouse embryonal carcinoma and embryonal stem (ES) cells. We have developed a retroviral vector, the murine embryonic stem cell virus (MESV), that is active in embryonal carcinoma and ES cells. MESV was derived from a retroviral mutant [PCC4-cell-passaged myeloproliferative sarcoma virus (PCMV)] expressed in embryonal carcinoma cells but not in ES cells. The enhancer region of PCMV was shown to be functional in both cell types, but sequences within the 5' untranslated region of PCMV were found to restrict viral expression in ES cells. Replacement of this region by related sequences obtained from the dl-587rev retrovirus results in MESV, a modified PCMV virus that confers G418 resistance to fibroblasts and ES cells with similar efficiencies. Expression of MESV in ES cells is mediated by transcriptional regulatory elements within the 5' long terminal repeat of the viral genome.