HTLV-1 [HTLV (human T-cell lymphotrophic virus) type 1] is associated with a number of human diseases. HTLV-1 protease is essential for virus replication, and similarly to HIV-1 protease, it is a potential target for chemotherapy. The primary sequence of HTLV-1 protease is substantially longer compared with that of HIV-1 protease, and the role of the ten C-terminal residues is controversial. We have expressed C-terminally-truncated forms of HTLV-1 protease with and without N-terminal His tags. Removal of five of the C-terminal residues caused a 4–40-fold decrease in specificity constants, whereas the removal of an additional five C-terminal residues rendered the protease completely inactive. The addition of the N-terminal His tag dramatically decreased the activity of HTLV-1 protease forms. Pull-down experiments carried out with His-tagged forms, gel-filtration experiments and dimerization assays provided the first unequivocal experimental results for the role of the C-terminal residues in dimerization of the enzyme. There is a hydrophobic tunnel on the surface of HTLV-1 protease close to the C-terminal ends that is absent in the HIV-1 protease. This hydrophobic tunnel can accommodate the extra C-terminal residues of HTLV-1 protease, which was predicted to stabilize the dimer of the full-length enzyme and provides an alternative target site for protease inhibition.