Caprine arthritis encephalitis virus (CAEV) is a lentivirus that is closely related to visna virus and more distantly related to the human lentivirus human immunodeficiency virus 1 (HIV-1). Like other lentiviruses, the genome of CAEV contains multiple small ORFs that encode viral regulatory proteins. Sequence analysis of the CAEV genome and cDNAs generated from mRNA in infected cells has suggested that one of these ORFs encodes a protein (Rev-C) that is analogous to Rev of visna virus and HIV. Antibodies generated to a carboxy-terminal peptide of the rev ORF immunoprecipitate an 18-kDa protein from cells transfected with the Rev cDNA clone. Immunoprecipitation and immunofluorescence analysis of CAEV-infected ovine primary cells show that the product of the rev ORF is expressed during infection and localizes to the nucleolus of infected cells. Also, sera from CAEV-infected goats specifically immunoprecipitates an in vitro-translated product from the full-length Rev cDNA clone as well as that from the unique second open reading frame of Rev-C which shows that the Rev-C protein is expressed during natural CAEV infection of animals. Insertion of either a mutation that creates two stop codons in the unique second open reading frame of Rev-C or a mutation in the basic domain of Rev-C into the CAEV infectious molecular clone renders the virus unable to replicate in primary goat synovial membrane cells. Analysis of the RNA and proteins produced from both Rev-deficient clones indicates that they are defective in the accumulation of structural gene mRNAs in the cytoplasm as well as in synthesis of structural proteins compared to the wild-type CAEV clone. These data indicate that CAEV encodes a Rev protein that is required for efficient viral replication in culture.