The neuropathologic findings in 11 children with a new CNS disorder that occurs in children with the acquired immunodeficiency syndrome (AIDS) and is postulated to be due to LAV/HTLV-III, the virus that causes AIDS, are reported. The children, who ranged in age from 4 months to 11 years, died of AIDS complicated by progressive encephalopathy. Ten of the children either had positive serum antibody for LAV/HTLV-III or had received blood products from donors later found to be antibody-positive. Examination of the brains of these children at autopsy revealed a unique constellation of findings, including varying degrees of diminished brain weight in all cases, inflammatory cell infiltrates in nine brains, multinucleated cells in eight, three of which also contained multinucleated giant cells, vascular calcification in ten, vascular and perivascular inflammation in five, and white matter changes in nine. Inflammatory and vascular lesions were most prominent in basal ganglia and pons. LAV/HTLV-III retroviral particles, associated with multinucleated giant cells, were observed in two brains on electron microscopic examination. These two and one additional brain had evidence of the LAV/HTLV-III genome by hybridization studies. Only one brain had a recognizable opportunistic infection.