To analyze regulation of the human T-cell leukemia virus type I (HTLV-I) long terminal repeat (LTR), cell lines were generated from LTR-tax x LTR-beta-galactosidase (beta-Gal) doubly transgenic mouse fibroblastic tumors. The HTLV-I LTR directs expression of both the tax and lacZ genes, and Tax up-modulates both promoters in primary cells. However, once cells were transformed by tax, beta-Gal but not tax expression was suppressed. Supertransformation of these cells with v-src suppressed both beta-Gal and tax expression. This suppression was reversed by treatment with the tyrosine kinase inhibitor herbimycin A or protein kinase A inhibitor H8. Electrophoretic mobility shift assays demonstrated augmented binding in the R but not U3 region. This binding was competitively inhibited by a high-affinity CREB oligodeoxynucleotide and super-shifted with a specific CREB antibody. Treatment of cells with the cyclic AMP analog dibutyryl cyclic AMP also transiently increased the R region binding dramatically. In vitro DNase I footprint analysis identified a protein-binding sequence in the R region which corresponded with suppression. However, this target sequence lacked a conventional CREB-binding site. A 70.5-kDa DNA-binding protein was partially purified by affinity chromatography, along with a 49-kDa protein which reacted with CREB-specific sera. These data demonstrate that HTLV-I LTR suppression is associated with CREB factor binding in the R region, probably by direct interaction with a 70.5-kDa protein, and provide a novel mechanism for maintenance of viral latency.