Bovine leukemia virus (BLV) gene expression is exquisitely regulated at multiple levels, including a transcriptional control effected by virus-encoded trans-acting factors and cis-acting target sequences. Like the human T-cell leukemia viruses type I and type II, but unlike other RNA tumor viruses, BLV contains several open reading frames at the 3' end of its genome. A subgenomic mRNA which encodes two overlapping reading frames from this region could produce proteins of 38 and 18 kilodaltons (kDa). A series of cis-trans experiments using transfected virus gene constructs in different combinations revealed that expression of the 38-kDa protein was both necessary and sufficient to activate, in trans, the BLV promoter. This activation was specific for the BLV long terminal repeat, as a variety of related retroviral promoters were not responsive to the expression of the 38-kDa protein p38(XBL). Deletion analysis and construction of chimeric promoters identified a 75-base-pair long terminal repeat region which functions like a p38(XBL)-dependent enhancer element.