We used the Escherichia coli chloramphenicol acetyltransferase gene (cat) to study sequences that influence expression of the equine infectious anemia virus (EIAV) genome. The EIAV long terminal repeat (LTR) directed CAT activity in a canine cell line, but at levels much lower than those achieved with other eucaryotic viral promoters. In the same cells infected with EIAV or cotransfected with molecularly cloned EIAV genomic DNA, LTR-directed activity was markedly enhanced. Comparison of cat mRNA and protein levels in these cells indicated that this trans-activating effect could be accounted for by a bimodal mechanism in which both transcriptional and posttranscriptional events are enhanced. trans-Activation but not promoter activity was abolished by deletion of the R-U5 region of the EIAV LTR. EIAV sequences responsible for the trans-activating function could be localized to a region encompassing the 3' and 5' termini of the pol and env genes, respectively (nucleotides 4474 to 5775). Interestingly, this stretch harbors a short open reading frame with some amino acid sequence similarity to the human immunodeficiency virus type I tat gene product.