Human T-cell leukemia virus type 1 (HTLV-1) is associated with leukemia/lymphoma and neurologic disorders. Although the viral transcriptional activator Tax is the critical viral oncoprotein, Rex, which regulates the expression of the viral structural and enzymatic genes, is essential for efficient viral replication. Herein, we investigate the contribution of Rex in HTLV-1 immortalization of primary T cells in vitro and viral survival in an infectious rabbit animal model. A Rex-deficient HTLV-1 (HTLVRex-) was constructed and characterized for viral gene expression, protein production, and immortalization capacity. Cells transiently transfected with the HTLVRex- proviral clone produced low detectable levels of p19 Gag. 729HTLVRex- stable transfectants produced functional Tax, but undetectable levels of Rex or p19 Gag. Coculture of irradiated 729HTLVRex- cells with peripheral blood mononuclear cells (PBMCs) resulted in sustained interleukin-2 (IL-2)-dependent growth of primary T lymphocytes. These cells carried the HTLVRex- genome and expressed tax/rex mRNA but produced no detectable Rex or p19 Gag. Rabbits inoculated with irradiated 729HTLVRex- cells or 729HTLVRex- cells transiently transfected with a Rex cDNA expression plasmid failed to become persistently infected or mount a detectable antibody response to the viral gene products. Together, our results provide the first direct evidence that Rex and its function to modulate viral gene expression and virion production is not required for in vitro immortalization by HTLV-1. However, Rex is critical for efficient infection of cells and persistence in vivo.