FLV is suppressive both in vivo and in vitro in terms of the specific sheep RBC induced antibody response. FLV-containing extracts from infected spleens were found to be markedly immunosuppressive. However, these extracts stimulated the background PFC response to SRBC in vitro, whereas similar background responses were depressed in infected animals. Furthermore the virus-containing extracts were mitogenic for normal spleen cells in vitro. Thus, FLV infection may cause immunocyte division (i.e., transformation) as an early event followed later by marked impairment of the function of the cells as evinced by their failure to respond normally to challenge immunization.