Transcription factor AP-2 activates gene expression of HTLV-I. The HTLV-I LTR contains three conserved regulatory elements known as 21 base pair repeats which are required for stimulation of gene expression by the transactivator protein tax. Mutagenesis indicates that the 21 bp repeats can be subdivided into three motifs, A, B and C, each of which influences the level of tax activation. The A site in the 21 bp repeat has strong homology with previously described binding sites for the transcription factor AP-2. We demonstrated that AP-2 mRNA was present in T-lymphocytes and that cellular factors from both non-transformed and transformed T-lymphocytes specifically bound to the consensus motif for AP-2 in each 21 bp. To determine the role of AP-2 in the regulation of the HTLV-I LTR gene expression, we used an AP-2 cDNA in DNA binding and transient expression assays. Gel retardation and methylation interference studies revealed that bacterially produced AP-2 bound specifically and with high affinity to all three 21 bp repeats, and that it required the core sequence AGGC for specific binding. Binding of AP-2 prevented the subsequent binding of members of the CREB/ATF family to an adjacent regulatory motif in the 21 bp repeat. Transfection of an AP-2 expression construct into T-lymphocytes activated gene expression from the HTLV-I LTR. At least two 21 bp repeats were required for high levels of AP-2 activation and mutagenesis of the AP-2 consensus binding sequences in the 21 bp repeats eliminate this activation. (ABSTRACT TRUNCATED AT 250 WORDS)