Human T-lymphotropic virus type 1 (HTLV-1), a complex retrovirus, causes adult T-cell lymphoma/leukemia and is linked to a variety of immune-mediated disorders. The roles of proteins encoded in the pX open reading frame (ORF) II gene region in HTLV-1 replication or in mediating virus-associated diseases remain to be defined. A nucleus-localizing 30-kDa protein, p30(II), encoded within pX ORF II has limited homology with the POU family of transcription factors. Recently, we reported that selected mutations in pX ORF II diminish the ability of HTLV-1 to maintain high viral loads in infected rabbits. Herein we have tested the transcriptional ability of p30(II) in mammalian cells by using yeast Gal4 fusion protein vectors and transfection of luciferase reporter genes driven by CREB-responsive promoters. p30(II) as a Gal4 DNA-binding domain (DBD) fusion protein transactivates Gal4-driven luciferase reporter gene activity up to 25-fold in 293 and HeLa-tat cells. We confirmed nuclear localization of p30(II) and demonstrate dose-dependent binding of p30(II)-Gal4(DBD) to Gal4 DNA-binding sites. The transcriptional activity of p30(II)-Gal4(DBD) was independent of TATA box flanking sequences, as shown by using two different Gal4 reporter systems. Studies of selected p30(II) mutants indicated that domains that mediate transcription are restricted to a central core region of the protein between amino acids 62 and 220. Transfection of a p30(II)-expressing plasmid repressed cellular CRE-driven reporter gene activity, with or without Tax expression. In contrast, p30(II) at lower concentrations enhanced HTLV-1 long terminal repeat-driven reporter gene activity independent of Tax expression. These data are the first to demonstrate a transcriptional function for p30(II) and suggest a mechanism by which this nuclear protein may influence HTLV-1 replication or cellular gene expression in vivo.