The X region of human T-cell lymphotropic virus type 1 (HTLV-1) encodes two nucleolar/nuclear proteins, the posttranscriptional regulator of mRNA expression Rex and a protein of unknown function named Tof. To gain insight into the possible biological role of Tof, we investigated the mechanism governing its intracellular trafficking and identified its nucleolar/nuclear localization signal (NLS). Mutational analysis of Tof revealed that its NLS was located between amino acids 71 and 98 and contained two arginine-rich domains that functioned in an interdependent manner. Studies of Tof-Rex hybrid proteins showed that the Tof NLS could functionally replace the NLS of Rex at the level of nuclear targeting. As the NLS of Rex is known to mediate its interaction with its RNA target, the Rex-responsive element (RXRE), we tested whether the NLS of Tof could replace that of Rex in mediating activation of a RXRE-containing mRNA. Results showed that the NLS of Tof was indeed able to mediate activation of RXRE-containing mRNAs, suggesting that Tof itself may function as a regulator of RNA expression and utilization. A comparison of their compartmentalization in response to actinomycin D treatment indicated that Tof did not share Rex's shuttling pathway. Expression of Tof from its natural multiply spliced mRNA required the presence of Rex, suggesting that Tof may regulate viral or cellular mRNA expression during the later stages of viral replication.