Although it has long been thought that a retrovirus is the responsible agent for ovine pulmonary carcinoma (OPC), identification of a replicative viral agent has proven difficult. Recently, the genome of a new retrovirus, jaagsiekte sheep retrovirus (JSRV), found in the lung-wash of affected sheep lung, has been cloned and sequenced; characterization of this virus and its consistent presence in tumor cells argue for its role as the aetiologic agent of OPC. Analysis of the nucleic acid sequence of the JSRV genome, suggests a new class of retrovirus, one that is chimeric according to the morphological classification scheme used for retroviruses. The genome of this virus does not appear to contain an oncogene, and the mechanism by which it causes disease is still unknown. The presence of multiple copies of endogenous retroviruses related to JSRV in DNA of OPC-affected and unaffected sheep further complicates investigation of oncogenesis in OPC. This review examines the evidence for a retrovirus as the causative agent for OPC, with particular emphasis on the viruses studied to date. The significance of endogenous JSRV-related sequences is considered. The mechanisms by which a retrovirus such as JSRV might induce lung tumours in sheep, and which of these are most likely, are discussed in light of these developments, as are the prospects for new means of diagnosis and treatment of this disease.