This chapter summarizes studies that address the question of genetic polymorphism of human T-lymphotropic virus type III (HTLV-III) and evaluates the implications of these studies for the pathogenesis of AIDS and the prospects of developing a broadly cross-reactive vaccine. The availability of the sequential isolates also made it possible to estimate the rate of genetic evolution of HTLV-III in a natural infection. The evidence that the envelope gene is the site of greatest divergence came from heteroduplex studies in which the cloned genomes of two divergent HTLV-III were annealed under conditions of increasing stringency. The small envelope protein of HTLV-III contains three hydrophobic sequences, one immediately at the cleavage site, which is separated from the second hydrophobic sequence by ten amino acids. In the extracellular major envelope protein, insertions, deletions, and duplications of oligopeptides were found in addition to isolated changes. Inspection of the aligned sequences revealed regions of conserved polypeptide segments interspersed with five regions of high variability.