Caprine arthritis-encephalitis virus (CAEV) and visna virus are pathogenic lentiviruses of goats and sheep which share morphologic features and sequence homology with human T-cell lymphotropic virus type III (HTLV-III), the etiologic agent of the acquired immune deficiency syndrome. The nucleotide sequence of the CAEV long terminal repeat (LTR) was determined, and it was found to be 450 base pairs long, with U3, R, and U5 regions of 287, 85, and 78 base pairs, respectively. Portions of the CAEV LTR are closely homologous to analogous regions of visna virus. The CAEV LTR is not significantly homologous with the HTLV-III LTR; however, like HTLV-III, visna virus, and equine infectious anemia virus, CAEV uses tRNA lysine as a primer for reverse transcription. The transcriptional activity of the CAEV and visna virus LTRs was measured by a chloramphenicol acetyltransferase assay, and the activity of the visna virus LTR was generally higher in a variety of uninfected cell types. Infection of cells with visna virus markedly increased gene expression directed by either the CAEV or visna virus LTR, but in contrast, infection of cells with CAEV had little effect on the activity of either LTR. The lack of trans-activation by CAEV, a virus which causes debilitating arthritis and encephalitis in goats, suggests that trans-activation may not be a general property of pathogenic lentiviruses.