A retrovirus promoter-trap vector (U3LacZ) has been developed in which Escherichia coli lacZ coding sequences were inserted into the 3' long terminal repeat (LTR) of an enhancerless Moloney murine leukemia virus. The U3LacZ virus contains the longest reported LTR (3.4 kbp); nevertheless, lacZ sequences did not interfere with the ability of the virus to transduce a neomycin resistance gene expressed from an internal promoter. Duplication of the LTR placed lacZ sequences in the 5' LTR just 30 nucleotides from the flanking cellular DNA. Approximately 0.4% of integrated proviruses expressed beta-galactosidase as judged by 5-bromo-4-chloro-3-indolyl-beta-D-galactopyranoside (X-Gal) staining, and individual clones expressing lacZ were isolated by fluorescence-activated cell sorting. In all clones examined, beta-galactosidase expression resulted from the fusion of lacZ sequences to transcriptional promoters located in the flanking cellular DNA. Furthermore, by differential sorting of neomycin-resistant cell populations, clones were isolated in which lacZ expression was induced and repressed in growth-arrested and log phase cells, respectively.