Human immunodeficiency virus type 1 (HIV-1) infects the central nervous system and plays a direct role in the pathogenesis of AIDS dementia. However, the molecular mechanisms underlying HIV-1 expression in the central nervous system are poorly understood. We have recently reported that the nuclear receptor chicken ovalbumin upstream promoter transcription factor (COUP-TF), an orphan member of the nuclear receptor superfamily, is an activator of HIV-1 gene transcription. Here, our results show that COUP-TF stimulates HIV-1 transcription in primary cultured human microglial cells, the primary target for HIV-1 infection in brain. Run-on assays indicated that COUP-TF acts on the initiation step of transcription. Results from reverse transcription-polymerase chain reaction and immunocytochemistry analysis further revealed the importance of this factor by demonstrating that overexpression of COUP-TF leads to initiation of viral replication in primary HIV-infected human microglia. In addition, COUP-TF is able to physically interact and cooperate with the viral transactivator Tat. The combination of COUP-TF and Tat leads to NF-kappaB- and Sp1-independent enhanced transcriptional stimulation. In vitro binding studies showed that COUP-TF interacts with Tat through amino acids within the N-terminal DNA-binding domain of COUP-TF. Amino acids 48-72 in the basic and C-terminal regions of Tat are required for the binding of Tat to COUP-TF. These results suggest that COUP-TF is an essential transcription factor involved in HIV-1 expression in microglia and reveal a novel interplay of Tat and COUP-TF during regulation of viral expression.