Sequences which control basal human T-cell lymphotropic virus type I (HTLV-I) transcription likely play an important role in initiation and maintenance of virus replication. We previously identified and analyzed a 45-nucleotide sequence (downstream regulatory element 1 [DRE 1]), +195 to +240, at the boundary of the R/U5 region of the long terminal repeat which is required for HTLV-I basal transcription. We identified a protein, p37, which specifically bound to DRE 1. An affinity column fraction, containing p37, stimulated HTLV-I transcription approximately 12-fold in vitro. We now report the identification of a cDNA clone (15B-7), from a Jurkat expression library, that binds specifically to the DRE 1 regulatory sequence. Binding of the cDNA fusion protein, similarly to the results obtained with purified Jurkat protein, was decreased by introduction of site-specific mutations in the DRE 1 regulatory sequence. In vitro transcription and translation of 15B-7 cDNA produced a fusion protein which bound specifically to the HTLV-I +195 to +240 oligonucleotide. The partial cDNA encodes a protein which is homologous to the C-terminal 196 amino acids of the 36-kDa transcription factor, YB-1. Cotransfection of a YB-1 expression plasmid increases HTLV-I basal transcription approximately 14-fold in Jurkat T lymphocytes. On the basis of the molecular weight, DNA-binding characteristics, and in vivo transactivation activity, we suggest that the previously identified DRE 1-binding protein, p37, is YB-1.