Yunnan seems to be a "hot spot" region of HIV-1 recombination. CRF01_AE and subtype CRF08_BC are two main HIV-1 clades circulating in Yunnan. We report here a novel HIV-1 second-generation recombinant form originated from CRF01_AE and CRF08_BC. The strain (12YN10551) was isolated from a HIV-positive male infected through heterosexual contact in Dali prefecture of Yunnan province, China. This is the first report of HIV-1 near full-length genomic sequence in Dali. Recombinant analysis shows that 12YN10551 was composed of two well-established circulating recombinant forms (CRF01_AE and CRF08_BC). Two CRF01_AE recombinant fragments were inserted into the CRF08_BC backbone genome in the pol/vif/vpr/tat/rev and nef gene regions, respectively. The discovery and characterization of this new recombinant indicate that intersubtype recombination is continuously generating new forms of HIV-1. More work is needed to better monitor the genetic diversity of HIV-1 in this region.