Defective antigen presentation by HIV-infected monocytes is related to severe immune dysfunction in patients with AIDS, although the mechanism by which this process occurs is not well defined. Here we report that reduced capacity by HIV-infected monocytes to stimulate or present antigen to CD4+ T-cells was mediated by cellular factors associated with the plasma membranes of HIV-infected monocytes. In contrast, soluble factors secreted by HIV-infected monocytes had little or no effect on T-cell stimulation. Reduced T-cell stimulation by HIV-infected monocytes was related to down-modulation of CD4 expression on helper T-cells and was not affected by the inclusion of anti-HIV-gpl20 Ab, indicating the involvement of soluble or cell-associated viral envelope protein to be less likely. Exposure of CD4+ T-cells, that had been in co-culture with HIV-infected monocytes, to uninfected monocytes partially restored impaired T-cell stimulation. Thus, for the first time we report that altered capacity of HIV-infected monocytes to stimulate and present antigen to CD4+ T-cells is related to down-modulation of CD4 expression on T-cells, and appears to occur via membrane-associated cellular factors on HIV-infected monocytes.