The Cas-Br-E murine leukemia virus induces a spongiform myeloencephalopathy in susceptible mice. We constructed transgenic mice harboring either the viral genome (in a replication-defective form) or only its env gene. Low levels of expression of either transgene resulted in mild neuropathology and/or signs of neurological disease in more than half of these mice. These results indicate that the disease can occur in the absence of virus replication and strongly suggest that the env gp70/p15E complex is sufficient to induce disease.