Human T-lymphotropic virus type 1 (HTLV-1) Tax exerts pleiotropic effects on multiple cellular regulatory processes to bring about NF-κB activation, aberrant cell cycle progression, and cell transformation. Here we report that Tax stimulates cellular G₁/S entry but blocks mitosis. Tax expression in naive cells transduced with a retroviral vector, pBabe-Tax, leads to a significant increase in the number of cells in the S phase, with an accompanying rise in the population of cells with a DNA content of 4N or more. In all cell types tested, including BHK-21, mouse NIH 3T3, and human diploid fibroblast WI-38, Tax causes an uncoupling of DNA synthesis from cell division, resulting in the formation of multinucleated giant cells and cells with decondensed, highly convoluted and lobulated nuclei that are reminiscent of the large lymphocytes with cleaved or cerebriform nuclei seen in HTLV-1-positive individuals. This contrasts with the Tax-transformed cell lines, PX1 (fibroblast) and MT4 (lymphocyte), which produce Tax at high levels, but without the accompanying late-stage cell cycle abnormalities. PX1 and MT4 may have been selected to harbor somatic mutations that allow a bypass of the Tax-induced block in mitosis.