To examine the mechanism of lymphocytotoxicity induced by human T-lymphotropic virus type III/lymphadenopathy associated virus (HTLV-III/LAV), an in vitro model has been developed. Introduction of an HTLV-III/LAV proviral clone, HXB2, into normal lymphocytes results in the production of virions and cell death. The complete nucleotide sequence of the proviral form of HXB2 has now been determined. Its structure is quite similar to that previously determined for HTLV-III/LAV clones whose biological capacities had not previously been demonstrated. The biological function of two additional clones of HTLV-III/LAV, BH10 and HXB3, are reported. Clone BH10 which lacks the 5' long terminal repeat sequences (LTR) and a portion of the 3' LTR is reconstituted by substituting the corresponding sequences of HXB2 and is shown to be capable of generating infectious cytopathic virions. Clone HXB3, which has been partially sequenced, is also found to be capable of producing lymphocytopathic virus. Clone HXB3 differs from HXB2 in its lack of a termination codon in 3' orf, demonstrating that 3' orf plays no major role in virus replication or cytopathic activity. These data provide the necessary background to allow the identification of viral determinants of replication, cytopathic activity, and antigenicity using these functional proviral clones.