Human T-cell leukemia virus type I (HTLV-I) is a causative agent of adult T-cell leukemia (ATL). To elucidate the role of HTLV-I in leukemogenesis, we examined the biological activity of a defective HTLV-I provirus with the env-pX 3' long terminal repeat region cloned from leukemic cells of an ATL patient. Transfection experiments showed growth stimulation of NIH 3T3 cells--growing beyond the saturation density and growing in soft agar. Since the pX sequence is known to encode three proteins, Tax, Rex, and p21x, the biological activity of each pX gene was examined separately. The growth-stimulating activity was induced only by the tax gene in NIH 3T3 cells and Rat-1 cells. Furthermore, the tax gene induced tumorigenicity in nude mice when introduced into Rat-1 cells. Thus, a transcriptional transactivator gene of HTLV-I, tax, is clearly identified as a viral oncogene without a cellular homolog. The transforming activity of tax, possibly via a transcriptional deregulation of cell growth control, may play an important role in leukemogenesis of ATL in addition to its aberrant stimulation of the interleukin 2 system.