The Rex protein of human T-cell leukemia virus (HTLV) acts posttranscriptionally to induce the cytoplasmic expression of the unspliced and incompletely spliced viral RNAs encoding the viral structural and enzymatic proteins and is therefore essential for efficient viral replication. Rex function requires nuclear import, RNA binding, multimerization, and nuclear export. In addition, it has been demonstrated that the phosphorylation status of HTLV-2 Rex (Rex-2) correlates with RNA binding and inhibition of splicing in vitro. Recent mutational analyses of Rex-2 revealed that the phosphorylation of serine residues 151 and 153 within a novel carboxy-terminal domain is critical for function in vivo. To further define the functional domain structure of Rex-2, we evaluated a panel of Rex-2 mutants for subcellular localization, RNA binding capacity, multimerization and trans-dominant properties, and the ability to shuttle between the nucleus and the cytoplasm. Rex-2 mutant S151A,S153A, which is defective in phosphorylation and function, showed diffuse cytoplasmic staining, whereas mutant S151D,S153D, previously shown to be functional and in a conformation corresponding to constitutive phosphorylation, displayed increased intense speckled staining in the nucleoli. In vivo RNA binding analyses indicated that mutant S151A,S153A failed to efficiently bind target RNA, while its phosphomimetic counterpart, S151D,S153D, bound twofold more RNA than wild-type Rex-2. Taken together, these findings provide direct evidence that the phosphorylation status of Rex-2 is linked to cellular trafficking and RNA binding capacity. Mutants with substitutions in either of the two putative multimerization domains or in the putative activation domain-nuclear export signal displayed a dominant negative phenotype as well as defects in multimerization and nucleocytoplasmic shuttling. Several carboxy-terminal mutants that displayed wild-type levels of phosphorylation and localized to the nucleolus were also partially impaired in shuttling. This is consistent with the hypothesis that the carboxy terminus of Rex-2 contains a novel domain that is required for efficient shuttling. This work thus provides a more detailed functional domain map of Rex-2 and further insight into its regulation of HTLV replication.