ABSTRACT We and others have recently uncovered the existence of human T-cell lymphotropic virus type 3 (HTLV-3), the third member of the HTLV family. We have now sequenced the full-length HTLV-3 _Pyl43 provirus. As expected, HTLV-3 _Pyl43 contains open reading frames corresponding to the gag , pol , env , tax , and rex genes. Interestingly, its long terminal repeat (LTR) includes only two Tax-responsive elements, as is the case for type 3 simian T-cell lymphotropic viruses (STLV-3). Phylogenetic analyses reveal that HTLV-3 _Pyl43 is closely related to central African STLV-3. Unexpectedly, the proximal pX region of HTLV-3 _Pyl43 lacks 366 bp compared to its STLV-3 counterpart. Because of this deletion, the previously described RorfII sequence is lacking. At the amino acid level, Tax3 _Pyl43 displays strong similarities with HTLV-1 Tax, including the sequence of a PDZ class I binding motif. In transient-transfection assays, Tax3 _Pyl43 activates the transcriptions from HTLV-3, HTLV-1, and HTLV-2 LTRs. Mutational analysis indicates that two functional domains (M22 and M47) important for transactivation through the CREB/ATF or NF-κB pathway are similar but not identical in Tax1 and Tax3 _Pyl43 . We also show that Tax3 _Pyl43 transactivates the human interleukin-8 and Bcl-X _L promoters through the induction of the NF-κB pathway. On the other hand, Tax3 _Pyl43 represses the transcriptional activity of the p53 tumor suppressor protein as well as the c-Myb promoter. Altogether, these results demonstrate that although HTLV-3 and HTLV-1 have only 60% identity, Tax3 _Pyl43 is functionally closely related to the transforming protein Tax1 and suggest that HTLV-3, like HTLV-1, might be pathogenic in vivo.