Transformation of cells by the human T cell leukemia virus type 1 occurs via mechanisms unique among oncogenic retroviruses. A prevailing hypothesis for HTLV-1-mediated cellular transformation is that expression of the viral transactivator, Tax, induces genomic instability. Tax-mediated failure in the cellular repair response is one possible mechanism for loss in genomic integrity. Here we have examined the in vivo repair response of Tax-expressing cells to determine the underlying defects that contribute to loss of genomic integrity. In these studies we examined the effects of de novo Tax-expression in naive “pre-neoplastic” REF52 cells. DNA-damage-induced p53 stabilization and concomitant transient stabilization of p21 were clearly evident in Tax-expressing cells. Likewise, the damage-induced apoptotic response of Tax-expressing cells was normal. However, the damage-induced G1 checkpoint was abrogated in either p53+ or p53− cellular backgrounds. Although nucleotide excision repair (NER) of asynchronous Tax-expressing cells was impaired, cell-cycle-independent assessment of NER in the global excision repair assay demonstrated comparable NER activity in Tax-expressing cells, suggesting that the failure of G1 checkpoint contributes to NER deficiency. Interestingly, we observed a dramatic increase in apoptosis and UV sensitivity of Tax-expressing p53−/− cells when compared to Tax-expressing p53+/+ cells. These data demonstrate that Tax-mediated cellular genomic instability arises from attenuation of cell-cycle checkpoint and imply a clonal dependence on p53 status separate from genomic integrity.