Replication of human immunodeficiency virus requires Tat protein which activates elongation of RNA polymerase II transcription at the HIV-1 promoter through interaction with the cyclin T1 (CycT1) subunit of the positive transcription elongation factor complex (P-TEFb). Tat binds directly through its transactivation domain to the CycT1 subunit of the P-TEFb and induces loop sequence specific binding of the P-TEFb onto nascent HIV-1 TAR RNA. By using a gel electrophoresis method and a comprehensive set of TAR loop mutants, we have identified the sequence and structural determinants for high-affinity CycT1-Tat-TAR ternary complex formation. Our results show that CycT1 and Tat binding to TAR RNA is highly cooperative, and a capacity of 85%, a Hill coefficient of 2.7, and a dissociation constant (K(D)) of 2.45 nM were observed. These results indicate that there are three binding sites on TAR RNA. CycT1 does not bind TAR RNA in the absence of Tat, and Tat binding to TAR, while detectable, is very inefficient in the absence of CycT1. It is conceivable that the CycT1-Tat heterodimer directly binds to TAR RNA in the U-rich RNA bulge region and this binding facilitates the interactions of the CycT1-Tat heterodimer at the other two sites in the RNA loop region. On the basis of our results, we suggest a model where CycT1 interacts with Tat protein and positions the protein complex to make contacts with the G34 region of the loop sequence; G34 is critical for CycT1-Tat binding and forms a C30.G34 base pair. Two functional groups, O6 and N7, at nucleotide positions 32 and 34 in the TAR loop are essential for CycT1-Tat interactions with TAR RNA. The identity of two nucleotides, U31 and G33, is not critical, but they contribute to the stabilization of the RNA-protein complex. The presence of a single-nucleotide bulge of A35 or C35 is essential for distortion of the backbone RNA structure as well as the accessibility of functional groups in the major groove of the double-helical region. CycT1-Tat interaction with TAR RNA represents another example of the flexibility and complexity of RNA structure involved in protein recognition.