The human immunodeficiency virus type 1 (HIV-1) negative factor, or Nef, has a variety of functions that are important in viral pathogenesis. Sequence analysis has identified nef mutations that are linked to the rate of disease progression in adults and children infected with HIV-1 subtype B. Here we have sequenced and analyzed HIV-1 subtype C nef sequences from 34 children with rapid (RP) or slow progressing (SP) disease and identified polymorphisms associated with disease stage including motifs involved in specific pathogenic functions. Unlike subtype B, insertions and deletions in the N-terminal variable region were observed exclusively in SP children (8 out of 25). Strong positive selection pressures were found in sites of known functional importance among SP sequences, whereas RP had strong negative selection across the gene. A lineage analysis of selection pressures indicated weaker pressure across the nef gene in SP sequences bearing a deletion in region 8-12, suggesting this deletion has functional importance in vivo. Together these results suggest a differential adaptation of certain Nef functions related to disease progression, some of which may be attributable to immune-imposed pressures. These data broadly reflect previous studies on subtype B, corroborate the decreased cytopathicity of SP viruses, but also highlight potential subtype differences that require further investigation.