The human T-cell leukemia viruses (HTLV) I and II, have been implicated in naturally occurring T-cell malignancies in man. We are engaged in ongoing comparative studies of HTLV-I and HTLV-II in our laboratory. We have isolated a replication-competent clone of HTLV-II, as well as several defective HTLV-II proviruses from the Mo-T hairy-cell leukemia line. HTLV-II is able to transform normal T-lymphocytes, and can replicate in both T- and B-cell lines. We have devised a convenient system allowing direct transfection of the HTLV-II genome into a B-cell line, followed by selection of HTLV-infected cells. Transfection studies with HTLV-II indicate that the virus can replicate in lymphoid cells, but not in fibroblasts. Transfection of recombinant constructs demonstrates that the viral long terminal repeat (LTR) can function as a promoter in lymphoid cells, but not in fibroblasts, suggesting a role for the viral LTR in conferring target cell specificity. Structural similarities between the HTLV-I and HTLV-II LTRs, including the presence of similar repeated base sequences in the U3 region, may account for this LTR specificity. The X region of HTLV-II has been sequenced and compared to that of HTLV-I. We have identified an mRNA species encoded by the major open reading frames in the X region of HTLV-I and HTLV-II and have located the splice acceptor site. Using antisera generated to short peptide sequences encoded by X, we have identified specific X-encoded viral proteins in HTLV infected cells.(ABSTRACT TRUNCATED AT 250 WORDS)