In this study, we analyzed the human immunodeficiency type 1 (HIV-1) viruses circulating between 1999 and 2004 in antiretroviral-naive women from a rural area of southern Mozambique. Nucleotide sequencing of the HIV-1 long terminal repeat (LTR) U3, envelope (env) C2V3C3, and protease (pr) genomic regions was performed from women sera samples collected in 1999 and 2004. Phylogenetic analysis revealed that all amplified sequences belonged to subtype C. Although env sequences were predominantly CCR5-tropic (R5), CXCR4-tropic (X4) variants were also identified (13%). Both 1999 and 2004 sequences were widely dispersed across multiple clusters and were related to different reference sequences from neighboring countries. Sequences from 2004 showed significantly more nucleotide genetic diversity than sequences from 1999. Importantly, genetic diversification was also observed at the pr and env amino acid level, suggesting that positive selection forces were implicated in the viral diversification. These results indicate the rapid spread and diversification of subtype C virus in Mozambique where HIV-1 prevalence in the Manhiça antenatal clinic reached 23% in 2004.