The hematological and neoplastic disorders induced in sheep by experimental bovine leukemia virus (BLV) infection are described. Seventeen of 19 BLV-inoculated sheep developed a marked increase in peripheral blood lymphocytes by 36 months after the intraperitoneal injection of peripheral blood lymphocytes from a BLV-infected cow. This increase correlated with an increase in the number of circulating B lymphocytes as demonstrated by the presence of surface immunoglobulins (SIg) and a high cell proliferative response to lipopolysaccharide and was considered to be a persistent B cell lymphocytosis. Lymphosarcoma developed in five BLV-infected sheep between 19 and 38 months postinoculation and was preceded in four out of five of these cases by an elevation in peripheral blood lymphocytes which began 4 to 26 months before death due to lymphosarcoma. The majority of tumor cells in all lymphosarcoma cases were of the centroblastic type, and in two cases in which the presence of SIg was assayed, the majority of tumor cells were SIg-positive. Thus, BLV-induced lymphosarcoma in sheep seems to be a B lymphocyte-derived tumor.