The factors controlling the dynamics of HIV-1 transmission from mother to infant are not clearly known. Previous studies have suggested the existence of maternal and placental protective mechanisms that inhibit viral replication in utero. Preliminary studies from our laboratory revealed that supernatant from placental stromal cells protected HIV-1-infected PBMC from virus-induced apoptosis and suppressed virus production. We have attempted to characterize the antiviral activity of this placental factor (PF) and delineate the stages of HIV-1 replication affected. This activity was not due to the presence of any known cytokine reported to have anti-HIV effect. Direct exposure to PF had no suppressive effect on the infectivity of cell-free HIV-1, and envelope-mediated membrane fusion appeared to be unaffected. Western blot analysis of HIV-1 from infected PBMC treated with PF revealed that expression of all viral proteins was reduced proportionately, both intracellularly and in released virions. However, exposure of HIV-1-infected cells to PF resulted in production of virions with 10-100-fold-reduced infectivity. PF-treated virions contained two- to threefold reduced ratios of cyclophilin A:Gag protein as compared with untreated virus. Reduced cyclophilin A content resulting in decreased binding of cyclophilin A to Gag could account, in part, for the observed reduction in infectivity. Our results suggest that placental cells produce an antiviral factor that protects the fetus during gestation and may have therapeutic potential.