The human polyomavirus JC virus (JCV) is the causative agent of the fatal demyelinating disease progressive multifocal leukoencephalopathy (PML), which is commonly seen in AIDS patients. The bicistronic viral RNA, which is transcribed at the late phase of infection, is responsible for expressing the viral capsid proteins and a small regulatory protein, agnoprotein. Immunohistochemical analysis of brain tissue from subjects with AIDS/PML revealed colocalization of the human immunodeficiency virus type 1 (HIV-1) transactivator, Tat, and JCV agnoprotein in nucleus and cytoplasm of "bizarre" astrocytes. In accord with this observation, we detected the copresence of agnoprotein and Tat in human astrocytes upon infection with JCV and HIV-1 or in astrocytic cells expressing these proteins after transfection. Interestingly, results from infection of human astrocytes with HIV-1 and JCV showed a decrease in the level of HIV-1 replication in cells that are coinfected with JCV. Conversely, a slight increase in the level of JCV replication was observed in the presence of HIV-1. The copresence of JCV and HIV-1 in astrocytes prompted us to investigate the possible cross-interaction of agnoprotein with Tat and its impact on HIV-1 gene transcription. Our results demonstrate that agnoprotein through its N-terminal domain associates with Tat and the interaction causes the suppression of Tat-mediated enhancement of HIV-1 promoter activity in these cells. Results from RNA and protein binding assays showed that agnoprotein can inhibit the association of Tat with its target RNA sequence, TAR, and with cyclin T1. Furthermore, agnoprotein is able to interfere with cross-interaction of Tat with the p65 subunit of NF-kappaB and Sp1, whose functions are critical for Tat activation of the long terminal repeat. These observations unravel a new pathway for the molecular interaction of these two viruses in biologically relevant cells in the brains of AIDS/PML patients.