Human T-cell leukemia virus type 1 (HTLV-1) encodes a 40-kDa Tax phosphoprotein. Tax is a transcriptional activator which modulates expression of the viral long terminal repeat and transcription of many cellular genes. Because Tax is a critical HTLV-1 factor which mediates viral transformation of T cells during the genesis of adult T-cell leukemia, it is important to understand the processes which can activate or inactivate Tax function. Here, we report that ubiquitination of Tax is a posttranscriptional mechanism which regulates Tax function. We show that ubiquitination does not target Tax for degradation by the proteasome. Rather, ubiquitin addition modifies Tax in a proteasome-independent manner from an active to a less-active transcriptional form.