The human immunodeficiency virus type-1 (HIV-1) regulatory protein Tat is produced in the early phase of infection and is essential for virus replication. Together with other viral products, Tat has been implicated in the pathogenesis of HIV-1-associated dementia (HAD). As HIV-1 infection in the brain is very limited and macrophage/microglial cells are the only cellular type productively infected by the virus, it has been proposed that many of the viral neurotoxic effects are mediated by microglial products. We and others have shown that Tat affects the functional state of microglial cells, supporting the hypothesis that activated microglia play a role in the neuropathology associated with HIV-1 infection. This review describes the experimental evidence indicating that Tat stimulates microglia to synthesize potentially neurotoxic molecules, including proinflammatory cytokines and free radicals, and interferes with molecular mechanisms controlling cAMP levels, intracellular [Ca2+], and ion channel expression.