Human T-cell leukemia virus type I (HTLV-I) is the etiologic agent of the adult T-cell leukemia, an aggressive and often fatal malignancy of activated human CD4 T cells. HTLV-I encodes an essential 40-kDa protein termed Tax that not only transactivates the long terminal repeat of this retrovirus but also induces an array of cellular genes. Tax-mediated transformation of T cells likely involves the deregulated expression of various cellular genes that normally regulate lymphocyte growth produced by altered activity of various endogenous host transcription factors. In particular, Tax is capable of modulating the expression or activity of various host transcription factors, including members of the NF-kappa B/Rel and CREB/ATF families, as well as the cellular factors HEB-1 and p67SRF. An additional distinguishing characteristic of HTLV-I infection is the profound state of viral latency that is present in circulating primary leukemic T cells. In this study, we demonstrate that HTLV-I Tax can physically associate with p100, the product of the Rel-related NF-kappa B2 gene, both in transfected cells and in HTLV-I-infected leukemic T-cell lines. Furthermore, the physical interaction of Tax with p100 leads to the inhibition of Tax-induced activation of the HTLV-I and human immunodeficiency virus type 1 long terminal repeats, reflecting p100-mediated cytoplasmic sequestration of the normally nuclearly expressed Tax protein. In contrast, a mutant of Tax that selectively fails to activate nuclear NF-kappa B expression does not associate with p100. Together, these results suggest that the cytoplasmic interplay of Tax and p100 may play an important role in the initiation and maintenance of HTLV-1 latency observed in adult T-cell leukemia.