Proviral sequences encoding defective HIV-1 regulatory genes have been detected previously in infected individuals; however, the role of these defective genomes in pathogenesis is unclear. The hypothesis that such replication-defective genomes might induce downregulation of the cellular receptor for HIV-1 (CD4) was tested. CEM cells were stably transfected with a provirus that contains a mutation in the splice site immediately 5' of the rev coding sequence. This mutant expresses early HIV-1 mRNAs but is defective for replication. Cells expressing this defective provirus displayed markedly reduced surface CD4. This downregulation of CD4 was dependent on an intact nef gene and was sufficient to cause resistance to superinfection by wild-type virus. These findings indicate that Nef as expressed by replication-defective HIV-1 can downregulate CD4. This perturbation of the T lymphocyte cell membrane is a potential basis for pathogenicity of defective HIV-1.