Studies of the genomic structure of human T-lymphotropic virus type III (HTLV-III) and related viruses, implicated as the causal agent of acquired immune deficiency syndrome (AIDS), have identified a sixth open reading frame in addition to the five previously known within the genome (gag, pol, sor, env and 3'orf). This gene, called tat-III, lies between the sor and env genes and is able to mediate activation, in a trans configuration, of the genes linked to HTLV-III long terminal repeat (LTR) sequences. We now present evidence that the product of tat-III is an absolute requirement for virus expression. We show that derivatives of a biologically competent molecular clone of HTLV-III, in which the tat-III gene is deleted or the normal splicing abrogated, failed to produce or expressed unusually low levels of virus, respectively, when transfected into T-cell cultures. The capacity of these tat-III-defective genomes was transiently restored by co-transfection of a plasmid clone containing a functional tat-III gene or by introducing the TAT-III protein itself. As HTLV-III and related viruses are the presumed causal agents of AIDS and associated conditions, the observation that tat-III is critical for HTLV-III replication has important clinical implications, and suggests that specific inhibition of the activity of tat-III could be a novel and effective therapeutic approach to the treatment of AIDS.