Jaagsiekte sheep retrovirus (JSRV) causes a contagious lung cancer in sheep and goats, with significant animal health and economic consequences. The host range of JSRV is in part limited by species-specific differences in the virus entry receptor, hyaluronidase 2 (Hyal2), which is not functional as a receptor in mice but is functional in humans. Sheep are immunotolerant of JSRV because of the expression of closely related endogenous retroviruses^,, which are not present in humans and most other species, and this may facilitate oncogenesis. Here we show that expression of the JSRV envelope (Env) protein alone in lungs of mice, by using a replication-incompetent adeno-associated virus vector, results in tumours with a bronchiolo-alveolar localization like those seen in sheep. Whereas lethal disease was observed in immunodeficient mice, tumour development was almost entirely blocked in immunocompetent mice. Our results provide a rare example of an oncogenic viral structural protein, show that interaction of the viral Env protein with the virus entry receptor Hyal2 is not required for tumorigenesis, and indicate that immune recognition of Env can protect against JSRV tumorigenesis.