Sensory polyneuropathies are the most frequent neurological complication of human immunodeficiency virus (HIV) infection. Distal symmetric polyneuropathy (DSP), associated with HIV infection, is characterized by length-dependent axonal degeneration of sensory fibres. In rodent dorsal root ganglia (DRG) cultures, HIV viral envelope protein gp120 results in neurotoxicity and axonal degeneration. Since it is unknown whether the axonal degeneration is a consequence of neuronal death or whether it is due to a direct toxic effect on axons, we investigated gp120-induced axonal toxicity using compartmentalized cultures of sensory neurons. Our results show that gp120 causes neuronal apoptosis and axonal degeneration through two, independent and spatially separated mechanisms of action: (i) an indirect insult to cell bodies, requiring the presence of Schwann cells, results in neuronal apoptotic death and subsequent axonal degeneration; (ii) a direct, local toxicity exerted on axons through activation of mitochondrial caspase pathway that is independent of cell body. This local axonal toxicity is mediated through binding of gp120 to axonal chemokine receptors and can be prevented by chemokine receptor blockers. In conclusion, we propose a novel pathway of axonal degeneration mediated by gp120 that is dependent on local activation of caspases in the axon. This observation suggests that axonal protection is a relevant therapeutic target for HIV-associated sensory neuropathy. Furthermore, chemokine receptor inhibitors, which are currently being developed as HIV entry inhibitor drugs, may also have a therapeutic role in HIV-associated peripheral neuropathies by preventing axonal degeneration.