Peripheral blood lymphocytes from male individuals at risk for AIDS were cultured in the presence of interleukin-2. Approximately 90% of cultures originating from pre-AIDS and AIDS patients were retrovirus-positive as detected by the reverse transcriptase (RT) assay and confirmed by electron microscopy. Prolonged incubation of the retrovirus-positive cells resulted in the establishment of several interleukin-2-independent B-lymphoblastoid cell lines. These cells were positive for Epstein-Barr virus (EBV)-specific antigens and contained EBV particles. When irradiated cells from the new lines were cocultivated with an RT-negative T-cell line CEM, an efficient transmission of retrovirus was detected. The supernatants from cocultivated cells had 5-10 fold higher levels of RT activity as compared with the supernatant from the cell line alone. Type-C retroviral particles and budding structures similar to those of human T cell leukemia virus type III (HTLV-III) and lymphadenopathy-associated virus (LAV) were found by electron microscopy. HTLV-III/LAV-specific polypeptides were detected by immunoprecipitation with sera from lymphadenopathy and AIDS patients, but not with sera from healthy individuals. Our data suggest that EBV-infected B lymphocytes from individuals at risk for AIDS may serve as a biological reservoir for the AIDS-associated retrovirus.