Simian foamy virus type 3 (SFV-3) is a retrovirus that has a complex genome organization and encodes two open reading frames (ORF-1 and ORF-2) in addition to the genes coding for gag, pol, and env. In this report, we demonstrate that ORF-1 of SFV-3 encodes a transcriptional transactivator designated taf (transactivator of foamy virus) which augments gene expression directed by the viral long terminal repeat (LTR). The taf responsive elements have been mapped to the U3 region of the LTR, between positions -637 and -180 (+1 represents the transcription initiation site). Two regions between -637 and -180 in the LTR are targets for taf transactivation. These target sequences for taf confer responsiveness to a heterologous promoter independent of orientation; thus, they function like conditional enhancers. The R-U5 region of the viral LTR is shown to have an inhibitory effect on gene expression. SFV-1 is a related spumavirus and encodes a taf gene that augments expression directed by the SFV-3 LTR as well as the SFV-1 LTR; however, the taf gene of SFV-3 transactivates the SFV-3 LTR but not the SFV-1 LTR. These data on regulatory elements in the SFV-3 LTR show that the mechanism of foamy virus transactivation is significantly different from lentiviruses as well as from the HTLV group of viruses.