The TAR element of HIV and the viral protein Tat form a molecular switch regulating transcriptional efficiency in HIV. We show that fluorescence correlation spectroscopy at the single molecule level is a powerful method to study the association between a Tat-derived peptide and TAR fragments. We also investigated the inhibition of the peptide-RNA complex by different ligands. Utilizing cross correlation measurements, the dissociation constants (K(D)) were determined. To demonstrate the important role of the bulge for the binding of Tat, we compared wt-TAR with three RNA mutants, mainly differing in the bulge region. For the TAR mutants studied at equimolar concentration of RNA and peptide (25 nM), the K(D) values are 15-35 times larger than that of wt-TAR. This gives evidence that the bulge region is the most crucial part of the TAR RNA for specific Tat binding. The IC(50) values for different inhibitors of the Tat/TAR complex both with wt-TAR and mutants have been determined. Neamine conjugate proved to be the best inhibitor of the complex formation. Our results are in agreement with earlier published data on this system using alternative biophysical and biochemical methods, respectively.