To determine the extent and nature of genetic variation present in independent isolates of HTLV-III/LAV, the nucleotide sequences of the entire envelope gene and parts of gag and pol were determined for two AIDS viruses. The results indicated that variation throughout the viral genome is extensive and that the envelope gene in particular is most highly variable. Within the envelope, changes were most prevalent within the extracellular region where clustered nucleotide substitutions and deletions/insertions were evident. Based on predicted secondary protein structure and hydrophilicity, these hypervariable regions represent potential antigenic sites. In contrast to the hypervariable regions, other sequences in the extracellular envelope and the overall envelope structure (including 18 of 18 cysteine residues), as well as most of the transmembrane region, were highly conserved.