Substantial evidence indicates that HIV-1 trans-activation by tat protein is mediated through the TAR RNA element. This RNA forms a stem-loop structure containing a three-nucleotide bulge and a six-nucleotide loop. Previous mutagenic analysis of TAR indicates that the bulge residues and a 4 bp segment of the stem constitute, in part, the tat binding site. However, there appears to be no sequence-specific contribution of the six-base loop. We have employed a ribonuclease protection technique to explore the interaction of tat with single-stranded regions of TAR. The results indicate that tat interacts with both the bulge and loop regions of TAR. Treatment of TAR RNA with RNase A results in cleavage at U23 and U31, located in the bulge and loop regions, respectively. High concentrations (approximately 2-mu-M) of Escherichia coli derived tat protein, prepared by standard procedures, gave complete protection of TAR RNA from RNase A cleavage. However, under these conditions, truncated TAR derivatives in which no stem-loop structure is expected to form were also protected, indicating nonspecific binding. In order to obtain a tat preparation with enhanced specificity toward TAR RNA, methods were developed for refolding the recombinant protein. This treatment enhanced the affinity of tat for TAR by approximately 30-fold [K(d)(apparent) < 25 nM] and markedly increased its specificity for the TAR. Again, tat protected TAR RNA from RNase A cleavage at both U23 and U31. Protection was also observed with RNase T1 which cleaves TAR RNA at three G residues in the six-base loop. Taken together with mutagenic studies, the data suggest that in addition to making sequence-specific interactions with bulge nucleotides, tat also interacts with components in the six-base loop but in a largely sequence-independent fashion.