Impaired myeloid dendritic cells (mDC) fail to elicit host antiviral immune responses, leading to disease progression in HIV-1 infection. However, mechanisms underlying mDC suppression remain elusive. In this study, we found that the T-cell co-stimulatory molecule programmed death-1 ligand-1 (B7-H1) is significantly up-regulated on peripheral mDC in HIV-1-infected typical progressors and AIDS patients, but is maintained at a relatively low level in long-term non-progressors. Successful immune reconstitution after highly active antiretroviral therapy, indicated by full suppression of HIV-1 replication and substantial increases of CD4 T-cell counts, correlated with a decrease in B7-H1 expression. Importantly, we also found that X4 HIV-1 isolates directly induced B7-H1 expression on mDC in vitro, while adding antiviral agents hampered this B7-H1 up-regulation. Blockade of B7-H1 in vitro strongly enhanced mDC-mediated allostimulatory capacity and IL-12 production. In contrast, B7-H1 ligation with soluble programmed death-1 (PD-1) reduced mDC maturation and IL-12 production but increased mDC apoptosis and IL-10 production. Thus, B7-H1 up-regulation may inhibit mDC-mediated immune response, thereby facilitating viral persistence and disease progression in HIV-1-infected patients. This study provides new evidence that B7-H1 inhibitory signaling may reversely mediate functional impairment of mDC in HIV-1 infection, which further supports the notion that B7-H1 blockade represents a novel therapeutic approach to this disease.