X-box binding protein 1 (XBP-1), a basic leucine zipper transcription factor, plays a key role in cellular unfolded protein response (UPR). There are two XBP-1 isoforms in cells, the spliced XBP-1S and the unspliced XBP-1U. XBP-1U has been shown to bind to the 21-bp Tax-responsive element 1 repeat of human T-lymphotropic virus type 1 (HTLV-1) long terminal repeat (LTR) in vitro and transactivate HTLV-1 transcription. Here we identify XBP-1S as a transcription activator of HTLV-1. Compared to XBP-1U, XBP-1S demonstrates stronger activating effects on both basal and Tax-activated HTLV-1 transcription in cells. Our results show that both XBP-1S and XBP-1U interact with Tax and bind to HTLV-1 LTR in vivo. In addition, elevated mRNA levels of XBP-1 and several UPR genes are detected in the HTLV-1-infected T cell lines, C10/MJ and MT2 cell lines, suggesting that HTLV-1 infection may trigger UPR in the host cells. We also identify Tax as a positive regulator of XBP-1 gene expression. Activation of UPR by tunicamycin shows no effect on HTLV-1 LTR, suggesting that HTLV-1 transcription is specifically regulated by XBP-1. Collectively, our study demonstrates a novel host-viral interaction between a cellular factor XBP-1 and transcriptional regulation of HTLV-1.