Friend murine leukemia virus (Fr-MLV) clone A8 causes spongiform neurodegeneration in the rat brain. The A8-env gene is a primary determinant of neuropathogenicity, and the 1.5-kb ClaI-HindIII fragment containing the LTR and 5' leader from A8 are additionally required for spongiosis. After replacement of the A8 enhancer region of the neuropathogenic chimera with the enhancer region of non-neuropathogenic 57, viral titer in the brain was reduced by two orders of magnitude. However, the A8 enhancer region was not responsible for the induction of spongiosis. The region responsible for neuropathogenesis was located in the 0.3-kb KpnI-AatII fragment of A8 containing the R-U5-5' leader. The chimeric virus possessing this 0.3-kb fragment of A8 and the A8-env in the 57 background induced a high rate of spongiform neurodegeneration within 7 weeks (9/9 of infected rats). Studies using cultured cells suggest that the 0.3-kb fragment influences the expression of Env protein. Furthermore, these neuropathogenic chimerae, despite low viral replication in the brain, exhibited a stronger expression of Env protein compared with that of non-neuropathogenic viruses.