The Rex protein of the type I human T-cell leukemia virus (HTLV-I) is essential for viral replication, acting post-transcriptionally to enhance the expression of unspliced and singly spliced viral mRNAs that encode the Gag, Pol, and Env virion proteins. Rex function involves its direct interaction with a complex stem-loop structure termed the Rex RNA response element (RexRE), which is located within the 3' retroviral long terminal repeat. Binding of Rex to the RexRE involves a positively charged arginine-rich domain located near the N-terminus which also functions as a nuclear localization signal. Strikingly, substitution of all seven of the arginine residues present within this domain with positively charged lysine residues exerted no adverse effect on the nuclear targeting of Rex. However, these lysine substitutions completely abrogated both Rex binding to the RexRE and Rex function. Reversion of multiple substituted lysines to arginines at specific locations within this domain was required to restore both RexRE binding and biological function to the Rex protein. Thus, while the presence of positive charge alone in this domain appears sufficient for nuclear localization of Rex, multiple arginine residues at specific sites are essential for the full expression of RNA binding and functional activity of this retroviral trans-regulatory protein.