To achieve cellular transformation, most oncogenic retroviruses use transduction by proto-oncogene capture or insertional mutagenesis, whereby provirus integration disrupts expression of tumor suppressors or proto-oncogenes. In contrast, the Human T-cell leukemia virus type 1 (HTLV-I) has been classified in a separate class referred to as "transactivating retroviruses". Current views suggest that the viral encoded Tax protein transactivates expression of cellular genes leading to deregulated growth and transformation. However, if Tax-mediated transactivation was indeed sufficient for cellular transformation, a fairly high frequency of infected cells would eventually become transformed. In contrast, the frequency of transformation by HTLV-I is very low, likely less than 5%. This review will discuss the current understanding and recent discoveries highlighting critical functions of Tax in cellular transformation. HTLV-I Tax carries out essential functions in order to override cell cycle checkpoints and deregulate cellular division. In addition, Tax expression is associated with increased DNA damage and genome instability. Since Tax can inhibit multiple DNA repair pathways and stimulate unfaithful DNA repair or bypass checkpoints, these processes allow accumulation of genetic mutations in the host genome. Given this, a "Random Mutagenesis" transformation model seems more suitable to characterize the oncogenic activities of HTLV-I.