The X-box element present within the promoter region of genes belonging to the major histocompatibility complex (MHC) plays a pivotal role in the expression of class II molecules, since it contains the binding sites for several well-characterized transcription factors. We have analyzed a randomly selected compilation of viral genomes for the presence of elements homologous to the X box of the HLA-DRA gene. We found that human immunodeficiency virus type 1 (HIV-1) shows the highest frequency of X-like box elements per 1,000 bases of genome. Within the HIV-1 genome, we found an X-like motif in the TAR region of the HIV-1 long terminal repeat (LTR), a regulative region playing a pivotal role in Tat-induced HIV-1 transcription. The use of a decoy approach for nuclear proteins binding to this element, namely, XMAS (X-like motif activator sequence), performed by transfection of multiple copies of this sequence into cells carrying an integrated LTR-chloramphenicol acetyltransferase construct, suggests that this element binds to nuclear proteins that enhance Tat-induced transcription. In this report we have characterized two proteins, one binding to the XMAS motif and the other to the flanking regions of XMAS. Mobility shift assays performed on crude nuclear extracts or enriched fractions suggest that similar proteins bind to XMAS from HIV-1 and the X box of the HLA-DRA gene. Furthermore, a UV cross-linking assay suggests that one protein of 47 kDa, termed FAX (factor associated with XMAS)-1, binds to the XMAS of HIV-1. The other protein of 56 kDa was termed FAX-2. In a decoy ex vivo experiment, it was found that sequences recognizing both proteins are required to inhibit Tat-induced HIV-1 LTR-driven transcription. Taken together, the data reported in this paper suggest that XMAS and nearby sequences modulate Tat-induced HIV-1 transcription by binding to the X-box-binding proteins FAX-1 and FAX-2. The sequence homology between XMAS and X box is reflected in binding of a common protein, FAX-1, and similar functional roles in gene expression. To our knowledge, this is the first report showing that transcription factors binding to the X box of the MHC class II genes enhance the transcription of HIV-1.