Gene expression of human T-cell leukemia virus type 1 (HTLV-1) is regulated by two trans-acting factors encoded by the pX region, p40tax and p27tax.p40tax is a transcriptional activator and p27rex is a post-transcriptional regulator. Using full-length viral DNA, we studied the regulatory effects of rex on HTLV-1 gene expression. p27rex is required for expression of both gag and env proteins, increasing the level of their mRNAs. The effect was dependent on the dose of p27rex expression plasmid. In parallel, increased doses of p27rex suppressed the expression of fully spliced pX mRNA, which encodes the regulatory proteins. These two effects of p27rex operated at the post-transcriptional level and were independent of transcriptional regulation. Lowering the level of pX mRNA down-regulates transcription of the proviral genome. These observations demonstrate that rex is a positive post-transcriptional regulator for gag, pol and env protein expression, and acts at the same time as an indirect negative regulator of viral transcription.