A ‘G-less’ cassette was cloned downstream of the human immunodeficiency virus type 1 (HIV-1) long terminal repeat (LTR) to facilitate rapid identification of authentic LTR- directed transcription in T cell nuclear extracts. Despite a high constitutive level of transcription, addition of chemically synthesized full-length HIV-lbni tat (amino acids 1-86) stimulated transcription 3-fold but only if the template included the TAR region of the LTR. Suppression of basal transcription in T cell nuclear extracts by sodium citrate increased the relative level of tat stimulation, but neither potassium chloride nor histone HI had an effect. A mutant synthetic tat polypeptide, lacking residues 22-32 in the cysteine-rich domain, was inactive in uptake assays and failed to stimulate transcription. Short basic peptides that competed full-length tat from complexes with TAR RNA also inhibited tat stimulation of transcription, whereas short basic peptide unable to bind TAR or compete tat from complexes were also unable to inhibit tat stimulation of transcription. These data confirm that active HIV-1 tat must first interact with TAR RNA via basic amino acid residues in order to stimulate transcription of downstream sequences.