Neurofibroma cell lines derived from mice transgenic for HTLV-I LTR tax express high levels of HTLV-I tax mRNA and protein and exhibit a transformed phenotype. A retrovirus vector carrying HTLV-I tax cDNA in reversed transcriptional orientation was stably transfected into the neurofibroma cells. Antisense RNA inhibited expression of the tax gene with a decrease of more than 40% in both tax mRNA and protein. Tax antisense RNA reversed the transformed phenotype as exhibited by dramatic changes in cell morphology and growth characteristics. Expression of several cellular genes which are activated by Tax protein including GM-CSF, IL-6, LT/TNF, c-myc and LIF was down-regulated, while M-CSF and c-src proto-oncogene expressions were up-regulated. Accumulation of beta-actin mRNA was not affected. The changes that occurred in the tax antisense expressing neurofibroma cells could be the consequence of the decreased concentration of Tax protein. These results also indicate that HTLV-I Tax protein is crucial for maintaining the transformed cell morphology, growth and proliferation of murine neurofibroma cells and suggest that deregulation of endogenous cellular genes by Tax protein is the mechanism through which neurofibromas occur in tax mice.