Human T-cell leukemia virus type 1 (HTLV-1) and HTLV-2 are retroviruses with similar biological properties. Whereas HTLV-1 is the causative agent of an aggressive T-cell leukemia, HTLV-2 has been associated with only a few cases of lymphoproliferative disorders. Tax1 and Tax2 are the transcriptional activators of HTLV-1 and HTLV-2, respectively. Here we show that Tax2 transformed a Rat-1 fibroblast cell line to form colonies in soft agar, but the size and number of the colonies were lower than those of Tax1. Use of a chimeric Tax protein showed that the C-terminal amino acids 300 to 353 were responsible for the high transforming activity of Tax1. Activation of cellular genes by Tax1 through transcription factor NF-kappa B is reportedly essential for the transformation of Rat-1 cells. Tax2 also activated the transcription through NF-kappa B in Rat-1 cells, and such activity was equivalent to that induced by Tax1. Thus, the high transforming activity of Tax1 is mediated by mechanisms other than NF-kappa B activation. Our results showed that Tax2 has a lower transforming activity than Tax1 and suggest that the high transforming activity of Tax1 is involved in the leukemogenic property of HTLV-1.