HTLV-I infection is associated with the development of adult T cell leukemia (ATL) and the neuroinflammatory disease HAM/TSP. There are quantitative and qualitative differences in the antiviral cytotoxic T cell (CTL) response in ATL and HAM/TSP although the underlying mechanisms are unclear. Here, we demonstrate that the HTLV-I Tax trans-activating protein is a transcriptional activator of CD40 ligand (CD40L), a critical regulator of dendritic cell maturation and adaptive immunity. Tax activates CD40L expression via a cyclosporin A insensitive pathway that is also independent of NF-kappaB. Although Tax upregulates CD40L gene expression, CD40L expression is absent in Tax-expressing HTLV-I-transformed cell lines via an epigenetic mechanism involving methylation. T lymphocytes cultured ex vivo from ATL patients, but not HAM/TSP or normal controls, exhibit a potent block in the induction of CD40L, but not CD69. However, the CD40L gene is not silenced by methylation in ATL patients, thus CD40L is downregulated by distinct mechanisms in HTLV-I-transformed cell lines and ATL patients.