Sequences which control basal human T-cell lymphotropic virus type I (HTLV-I) transcription probably play an important role in initiation and maintenance of virus replication. We have identified and analyzed a 45-nucleotide sequence (downstream regulatory element 1 [DRE 1]) at the boundary of the R/U5 region of the long terminal repeat which is required for HTLV-I basal transcription. The basal promoter strength of constructs that contained deletions in the R/U5 region of the HTLV-I long terminal repeat were analyzed by chloramphenicol acetyltransferase assays following transfection of Jurkat T cells. We consistently observed a 10-fold decrease in basal promoter activity when sequences between +202 to +246 were deleted. By reverse transcriptase polymerase chain reaction RNA analysis, we confirmed that the drop in chloramphenicol acetyltransferase activity was paralleled by a decrease in the level of steady-state RNA. DRE 1 did not affect the level of Tax1 transactivation. Using a gel shift assay, we have purified a highly enriched fraction that could specifically bind DRE 1. This DNA affinity column fraction contained four detectable proteins on sodium dodecyl sulfate (SDS)-polyacrylamide gel electrophoresis: p37, p50, p60, and p100. The affinity column fraction stimulated HTLV-I transcription approximately 12-fold in vitro. No effect was observed with the human immunodeficiency virus or adenovirus major late promoters. Following renaturation of the proteins isolated from an SDS-containing gel, p37, but not the other protein fractions, was able to specifically bind to DRE 1.