Human T-cell leukemia virus type-1 (HTLV-1) causes adult T-cell leukemia/lymphoma (ATL), HTLV-1-associated myelopathy/tropical spastic paraparesis (HAM/TSP), and other inflammatory diseases. There is no disease-specific difference in viral strains, and it is unclear how HTLV-1 causes such different diseases manifesting as lymphoproliferation or inflammation. Although some progress has been made in therapies for these diseases, the prognosis for ATL is still dismal and HAM/TSP remains an intractable disease. So far, two regulatory proteins of HTLV-1, Tax and HBZ, have been well studied and shown to have pleiotropic functions implicated in viral pathogenesis. Tax in particular can strongly activate NFκB, which is constitutively activated in HTLV-1-infected cells and considered to contribute to both oncogenesis and inflammation. However, the expression level of Tax is very low in vivo, leading to confusion in understanding its role in viral pathogenesis. A series of studies using IL-2-dependent HTLV-1-infected cells indicated that IL-10, an anti-inflammatory/immune suppressive cytokine, could induce a proliferative phenotype in HTLV-1-infected cells. In addition, type I interferon (IFN) suppresses HTLV-1 expression in a reversible manner. These findings suggest involvement of host innate immunity in the switch between lymphoproliferative and inflammatory diseases as well as the regulation of HTLV-1 expression. Innate immune responses also affect another important host determinant, Tax-specific cytotoxic T lymphocytes (CTLs), which are impaired in ATL patients, while activated in HAM/TSP patients. Activation of Tax-specific CTLs in ATL patients after hematopoietic stem cell transplantation indicates Tax expression and its fluctuation in vivo. A recently developed anti-ATL therapeutic vaccine, consisting of Tax peptide-pulsed dendritic cells, induced Tax-specific CTL responses in ATL patients and exhibited favorable clinical outcomes, unless Tax-defective ATL clones emerged. These findings support the significance of Tax in HTLV-1 pathogenesis, at least in part, and encourage Tax-targeted immunotherapy in ATL. Host innate and acquired immune responses induce host microenvironments that modify HTLV-1-encoded pathogenesis and establish a complicated network for development of diseases in HTLV-1 infection. Both host and viral factors should be taken into consideration in development of therapeutic and prophylactic strategies in HTLV-1 infection.