Human T cell leukemia virus type I (HTLV-I) causes adult T cell leukemia (ATL) in 2-5% of carriers after a long latent period. An HTLV-I encoded protein, Tax, induces proliferation and inhibits apoptosis, resulting in clonal proliferation of infected cells. However, tax gene expression in ATL cells is disrupted by several mechanisms, including genetic changes in the tax gene and DNA methylation/deletion of the 5' long terminal repeat (LTR). Because Tax is the major target of cytotoxic T-lymphocytes in vivo, loss of Tax expression should enable ATL cells to escape the host immune system. The 5' LTR of HTLV-I is frequently hypermethylated or deleted in ATL cells, whereas the 3' LTR remains unmethylated and intact, suggesting the involvement of the 3' LTR in leukemogenesis. Here we show that a gene encoded by the minus strand of the HTLV-I proviral genome, HTLV-I basic leucine zipper factor (HBZ), is transcribed from 3'-LTR in all ATL cells. Suppression of HBZ gene transcription by short interfering RNA inhibits proliferation of ATL cells. In addition, HBZ gene expression promotes proliferation of a human T cell line. Analyses of T cell lines transfected with mutated HBZ genes showed that HBZ promotes T cell proliferation in its RNA form, whereas HBZ protein suppresses Tax-mediated viral transcription through the 5' LTR. Thus, the single HBZ gene has bimodal functions in two different molecular forms. The growth-promoting activity of HBZ RNA likely plays an important role in oncogenesis by HTLV-I.