Human immunodeficiency virus type 1 (HIV-1) nef undergoes adaptive evolution in the central nervous system (CNS), reflecting altered requirements for HIV-1 replication in macrophages/microglia and brain-specific immune selection pressures. The role of Nef in HIV-1 neurotropism and pathogenesis of HIV-associated dementia (HAD) is unclear. In this study, we characterized 82 nef alleles cloned from brain, cerebral spinal fluid, spinal cord, and blood/lymphoid tissue-derived HIV-1 isolates from seven subjects with HAD. CNS isolate-derived nef alleles were genetically compartmentalized and had reduced sequence diversity compared to those from lymphoid tissue isolates. Defective nef alleles predominated in a brain-derived isolate from one of the seven subjects (MACS2-br). The ability of Nef to down-modulate CD4 and MHC class 1 (MHC-1) was generally conserved among nef alleles from both CNS and lymphoid tissues. However, the potency of CD4 and MHC-1 down-modulation was variable, which was associated with sequence alterations known to influence these Nef functions. These results suggest that CD4 and MHC-1 down-modulations are highly conserved functions among nef alleles from CNS- and lymphoid tissue-derived HIV-1 isolates that may contribute to viral replication and escape from immune surveillance in the CNS.