Betaretroviruses of sheep include two exogenous viruses, Jaagsiekte sheep retrovirus (JSRV) and enzootic nasal tumor virus (ENTV), and a group of endogenous viruses known as enJSRVs. The exogenous JSRV and ENTV are the etiological agents of ovine pulmonary adenocarcinoma (OPA) and enzootic nasal tumor (ENT), respectively. Sheep affected by OPA or ENT do not show an appreciable antibody response to JSRV or ENTV. Consequently, it is conceivable that enJSRV expression in the fetal lamb tolerizes sheep to the related exogenous viruses. In this study, possible mechanisms of interference between the sheep exogenous and endogenous betaretroviruses were investigated. In situ hybridization detected enJSRV RNAs in lymphoid cells associated with the lamina propria of the small intestine and in the thymus of sheep fetuses. Low-level expression of enJSRVs was also detected in the lungs. In addition, expression of enJSRVs was found to block entry of the exogenous JSRV, presumably via mechanisms of receptor interference. Indeed, enJSRVs, like JSRV and ENTV, were found to utilize hyaluronidase-2 as a cellular receptor.