The mechanisms regulating expression of mouse mammary tumor virus (MMTV)-encoded superantigens from the viral sag gene are largely unknown, due to problems with detection and quantification of these low-abundance proteins. To study the expression and regulation of the MMTV sag gene, we have developed a sensitive and quantitative reporter gene assay based on a recombinant superantigen-human placental alkaline phosphatase fusion protein. High sag-reporter expression in Ba/F3, an early B-lymphoid cell line, depends on enhancers in either of the viral long terminal repeats (LTRs) and is largely independent of promoters in the 5' LTR. The same enhancer region is also required for general expression of MMTV genes from the 5' LTR. The enhancer was mapped to a 548-bp fragment of the MMTV LTR lying within sag and shown to be sufficient to stimulate expression from a heterologous simian virus 40 promoter. No enhancer activity of the MMTV LTR was observed in XC sarcoma cells, which are permissive for MMTV. Our results demonstrate a major role for this enhancer in MMTV gene expression in early B-lymphoid cells.