Human T-lymphotropic virus type I (HTLV-1) is the etiological agent of adult T-cell leukemia/lymphoma (ATL) and HTLV-1 associated myelopathy/tropical spastic paraparesis (HAM/TSP). HTLV-1 viral transactivator/oncoprotein, Tax, activates viral transcription and usurps regulatory mechanisms that are critical for cell growth and division to facilitate viral replication. The effects that Tax exerts on cells include potent NF-κB activation, cell cycle perturbation and cell transformation. How Tax influences ATL development is incompletely understood at present. While Tax-expression is needed at the early stages of cellular transformation, at later times most ATL cells do not express tax; therefore, genetic and epigenetic changes in HTLV-1-infected cells are believed to play an important role in the etiology of ATL. This review attempts to integrate recent literature on the biological activities of Tax and the properties of HTLV-1 transformed T-cells and ATL cells, and speculate on what cellular changes may collaborate with Tax to effect cell transformation and ATL development.