The HTLV-I envelope sequence has been expressed by means of an open reading frame vector that allowed rapid identification of colonies making insert protein. The resulting protein was a fusion of a portion of the envelope and E. coli beta-galactosidase. The junction between the HTLV-I DNA and the vector was established by sequence analysis of the expression plasmid. Since the protein reacted with antibodies in patient sera, it has potential use in diagnostic assays. Since the segment of the envelope that is expressed is completely defined by the DNA sequence of the insert, this protein may also be used to map epitopes recognized by monoclonal antibodies directed against the HTLV-I envelope. The DNA sequence of HTLV-III was analyzed for similarity with other retroviruses in the pol and env regions. The pol region was found to have a high degree of sequence homology with other retroviruses, but did not closely resemble any particular retrovirus whose sequence homology was available. The envelope region had little or no sequence homology with other retroviruses, but analysis of the hydrophilicity profile revealed a region that may correspond in structure to the transmembrane envelope protein of other retroviruses.