Infection with the human T-cell leukemia virus-1 (HTLV-1) results in a variety of diseases including adult T-cell leukemia/lymphoma (ATL). Although the pathogenesis of these disorders is poorly understood, it involves complex interactions with the host immune system. Activation of infected T cells may play an important role in disease pathogenesis through induction of the oncogenic HTLV-1 Tax transactivator protein. To test this hypothesis, we employed transgenic mice in which Tax is regulated by the HTLV-1 LTR. T-cell receptor stimulation of LTR-Tax CD4(+) T cells induced Tax expression, hyper-proliferation, and immortalization in culture. The transition to cellular immortalization was accompanied by markedly increased expression of the antiapoptotic gene, mcl-1, previously implicated as important in T-cell survival. Immortalized cells exhibited a CD4(+)CD25(+)CD3(-) phenotype commonly observed in ATL. Engraftment of activated LTR-Tax CD4(+) T cells into NOD/Shi-scid/IL-2Rγ null mice resulted in a leukemia-like phenotype with expansion and tissue infiltration of Tax(+), CD4(+) lymphocytes. We suggest that immune activation of infected CD4(+) T cells plays an important role in the induction of Tax expression, T-cell proliferation, and pathogenesis of ATL in HTLV-1-infected individuals.