Jaagsiekte sheep retrovirus (JSRV) is the causative agent of ovine pulmonary adenocarcinoma (OPA), a sheep lung cancer that resembles human lung adenocarcinoma or bronchioloaveolar carcinoma (BAC). JSRV is the only retrovirus that shows lung tropism and induces pulmonary carcinoma. Several lines of evidence suggest that the lung tropism for JSRV is mainly determined by the viral long terminal repeats (LTR). In a previous study, we showed that HNF-3alpha and -3beta were able to transactivate the JSRV LTR when cotransfected into 3T3 cells. The JSRV LTR contains two putative HNF-3 binding sites; to investigate the contribution of each HNF-3 binding site to transcription, we generated reporter constructs with deletions or nucleotide substitutions in one or both of the putative HNF-3 binding sites. In murine MLE-15 cells (derived from type II pneumocytes), mutations within the upstream site (minus sign147 to minus sign128 bp) resulted in a 72% reduction of the LTR activity, while mutation of the downstream site had little effect. In contrast, transactivation of the JSRV LTR was greatly reduced in 3T3 cells cotransfected with an HNF-3alpha or -3beta expression plasmid when the downstream site was eliminated. Electrophoretic mobility shift assays (EMSA) revealed that nuclear extracts from MLE-15 cells, but not 3T3 cells, were able to form a retarded complex with oligonucleotides encompassing either the upstream or the downstream sites. Anti-HNF-3beta antiserum, but not anti-HNF-3alpha antiserum, supershifted both protein-DNA complexes. These results indicate that the JSRV LTR is activated by the lung-specific transcription factor HNF-3beta and that the upstream HNF-3 binding site is essential for expression in MLE-15 cells. In contrast, transactivation by HNF-3beta in 3T3 cells is mediated through the downstream HNF-3 site. On the other hand, JSRV LTR expression in a mouse lung Clara cell-derived line (mtCC1-2) did not appear to be strongly dependent on either HNF-3 binding site. These results support the notion that JSRV lung tropism is determined by the transcriptional specificity of the JSRV LTR, which is governed by interactions with lung-specific transcription factors.