HIV-1 Tat is a potent transactivator that stimulates expression from the HIV-1 LTR, from certain cellular gene promoters and from several heterologous viral promoters. Previous reports show that HIV-1 Tat transactivates tumor necrosis factor-beta (TNF-beta) promoter-directed gene expression in lymphocytic and monocytic cell lines and further demonstrate that a 'TAR-like structure' downstream of the TNF-beta promoter is essential for Tat activity. The ability of Tat to activate TNF-beta may have profound effects as TNF has been shown to be a potent activator of HIV-1 gene expression and an important immunomodulatory and growth regulatory factor. The studies presented herein demonstrate a novel finding where HIV-1 Tat specifically represses (> 10-fold) TNF-beta promoter-directed gene expression in central nervous system-derived glial cells. Amino acid residues 2 to 36 of HIV-1 Tat are required for TNF-beta repression. Tat repression of TNF-beta, a factor which upregulates HIV-1 gene expression, suggests a novel mechanism whereby HIV-1 is able to establish latent infection of glial cells that present no detectable virions and/or viral antigens.