The location of cis-acting regulatory sequences within the long terminal repeat (LTR) of the human T-cell lymphotropic virus type III was determined by eukaryotic cell transfection and chloramphenicol acetyltransferase (CAT) assay or in vitro cell-free transcription. A 160 base pair (bp) region of the LTR at position - 104 to 56 is required for trans-activation (cap site 1). A 24 bp enhancer element (EHE) capable of increasing the rate of transcription, irrespective of orientation, is located between nucleotides -105 to -80. It contains two 10 bp repeats. Three Sp1 binding sites (Sp1 III-I) are located between -78 and -45. A deletion of Sp1 III allowed for limited TATIII response while the presence of a functional enhancer restored the activity in HTLV-III infected cells. Complete loss of transcriptional activity and CAT gene expression could be attributed to the absence of EHE and Sp1 III-I at position -48. However, reinsertion of the enhancer restored accurate initiation but at a decreased level suggesting that the presence of a Sp1 binding site is not a prerequisite for the accurate initiation of transcription but is required for transcriptional activation independent of a promoter. The presence of a negative regulatory element (NRE) has been demonstrated by removal of the 5' part of U3 to position -117. Nucleotide sequences around the cap site and poly (A) site contain a trans-activator response element (TRE) and could be arranged into a unique secondary structure. A deletion of four nucleotides TCTGAGCCTGGGAGCTC causes a loss of three dimer linkage sequence binding. The CAT gene enzyme expression is completely abolished but transcriptional activity remains at reduced level.