The human T-cell leukemia virus (HTLV-1) Rex protein is required for the cytoplasmic expression of the incompletely spliced transcripts that encode the viral structural proteins. This effect is mediated by a highly structured cis-acting RNA element of 254 nucleotides termed the Rex response element, or RexRE. Here we demonstrate that one of the four known RexRE stem-loop structures as well as a 43-nt segment derived from this element is sufficient to mediate Rex function in vivo. Upon duplication, this stem-loop is shown to function as efficiently as the full-length RexRE. In vitro RNA binding analyses with wildtype and mutagenized RNA show that this stem-loop contains a high affinity binding site for Rex that coincides with a predicted bulge structure in the central part of this stem-loop. These results indicate that a small region of the RexRE containing a high affinity binding site is sufficient to mediate Rex function and suggest that sequences outside of this binding site have no unique role in mediating Rex regulation.