Human T-cell lymphotropic virus type 1 (HTLV-1) is the etiologic agent of adult T-cell leukemia, an aggressive CD4(+) malignancy. Although HTLV-2 is highly homologous to HTLV-1, infection with HTLV-2 has not been associated with lymphoproliferative disorders. Lentivirus-mediated transduction of CD34(+) cells with HTLV-1 Tax (Tax1) induced G(0)/G(1) cell cycle arrest and resulted in the concomitant suppression of multilineage hematopoiesis in vitro. Tax1 induced transcriptional upregulation of the cdk inhibitors p21(cip1/waf1) (p21) and p27(kip1) (p27), and marked suppression of hematopoiesis in immature (CD34(+)/CD38(-)) hematopoietic progenitor cells in comparison to CD34(+)/CD38(+) cells. HTLV-1 infection of CD34(+) cells also induced p21 and p27 expression. Tax1 also protected CD34(+) cells from serum withdrawal-mediated apoptosis. In contrast, HTLV-2 Tax (Tax2) did not detectably alter p21 or p27 gene expression, failed to induce cell cycle arrest, failed to suppress hematopoiesis in CD34(+) cells, and did not protect cells from programmed cell death. A Tax2/Tax1 chimera encoding the C-terminal 53 amino acids of Tax1 fused to Tax2 (Tax(221)) displayed a phenotype in CD34(+) cells similar to that of Tax1, suggesting that unique domains encoded within the C terminus of Tax1 may account for the phenotypes displayed in human hematopoietic progenitor cells. These remarkable differences in the activities of Tax1 and Tax2 in CD34(+) hematopoietic progenitor cells may underlie the sharp differences observed in the pathogenesis resulting from infection with HTLV-1 and HTLV-2.