Mink cell focus-inducing (MCF) viruses induce T-cell lymphomas in AKR/J strain mice. MCF 247, the prototype of this group of nonacute murine leukemia viruses, transforms thymocytes, in part, by insertional mutagenesis and enhancer-mediated dysregulation of cellular proto-oncogenes. The unique 3′ (U3) regions in the long terminal repeats of other murine leukemia viruses contain transcription factor binding sites known to be important for enhancer function and for the induction of T-cell lymphomas. Although transcription factor binding sites important for the biological properties of MCF 247 have not been identified, pathogenesis studies from our laboratory suggested to us that binding sites for Ikaros, a lymphoid-cell-restricted transcriptional regulator, affect the biological properties of MCF 247. In this report, we demonstrate that Ikaros binds to predicted sites in U3 sequences of MCF 247 and that site-directed mutations in these sites greatly diminish this binding in vitro. Consistent with these findings, ectopic expression of Ikaros in murine cells that do not normally express this protein significantly increases transcription from the viral promoter in transient gene expression assays. Moreover, site-directed mutations in specific Ikaros-binding sites reduce this activity in T-cell lines that express Ikaros endogenously. To determine whether the Ikaros-binding sites are functional in vivo, we inoculated newborn mice with a variant MCF virus containing a mutant Ikaros-binding site. The variant virus replicated in thymocytes less efficiently and induced lymphomas with a delayed onset compared to the wild-type virus. These data are consistent with the hypothesis that the Ikaros-binding sites in the U3 region of MCF 247 are functional and cooperate with other DNA elements for optimal enhancer function in vivo.