Human T-cell lymphotropic virus type 1 (HTLV-1) is the etiologic agent for adult T-cell leukemia. HTLV-1 transforms lymphocytes, and there is increasing evidence that the virus-encoded protein, Tax, plays a primary role in viral transformation. We have shown that wild-type p53 in HTLV-1-transformed cells is stabilized. This study was initiated to directly analyze whether the p53 in HTLV-1-transformed cell lines was transcriptionally active and to identify the viral gene product responsible for stabilization and inactivation. Transfection experiments using a p53-responsive reporter plasmid and γ-irradiation studies demonstrate that the wild-type p53 in HTLV-1-transformed cell lines is not fully active. Further, we demonstrate that the HTLV-1-transforming protein, Tax, stabilizes and inactivates p53 function. Cotransfection of Tax with p53 results in a greater than 10-fold reduction in p53 transcription activity. Using Gal4-p53 fusion proteins, we demonstrate that Tax inhibition of p53 transactivation function is independent of sequence-specific DNA binding. Moreover, Tax inhibits p53 function by interfering with the activity of the N-terminal activation domain (amino acids 1 to 52). We conclude that Tax is involved in the inactivation of p53 function and stabilization of p53 in HTLV-1-infected cells. The functional interference of p53 function by Tax may be important for transformation and leukemogenesis.