Taxi of human T-cell leukemia virus type 1 (HTLV-1) is an enigmatic viral transactivator that regulates expression of the viral gene and also several cellular genes normally controlled by various mitogenic signals. However, previous studies have failed to define the functional domains of Taxi for enhancer specificities and for transcriptional activation (95% of the protein portion was indispensable for the activation function). This complexity has hampered understanding of the molecular basis of Taxi action. In this study, we analysed the activation function of a Taxi fused to the heterologous DNA-binding domain of the yeast transcription factor GAL4 and dissected the domain required for the activation function by using derivatives of a Taxi mutant with an insertion between amino acids (a.a.) 170 and 171. Analysis of the derivatives of the mutant fusion protein having various partial overlaps encompassing the interrupted site suggested that two contiguous stretches, AD-I (2-255 a.a.) and AD-II (227-337 a.a.), should be both intact for the activation function of Taxi and that they form a functional activation domain.