Maintenance of Th1 responses and dendritic cell (DC) functions are compromised in HIV-1 infected individuals. To better understand these immune abnormalities, we developed an HIV-1 transgenic (Tg) rat. We report that Tg DCs induce elevated levels of SOCS-1 and secrete decreased IL-12p40 and elevated levels of IL-10 following TLR-4 stimulation by LPS. This leads to further induction of SOCS-1 by IL-10 and decreased IFN-gamma-mediated induction of interferon response factor (IRF)-1 and IL-12Rbeta1 expression in CD4+ T cells and to decreased IL-12-induction of IFN-gamma production by Th1 polarized T cells. We also show that SOCS-1 is elevated in CD4+ T cells from HIV-1 infected progressors, and is correlated with defective induction of IRF-1 following IFN-gamma stimulation, compared with healthy controls and HIV-1 natural viral suppressor (NVS) patients. These results suggest a link between high levels of SOCS-1, defects in innate immunity and adaptive Th1 responses that may be reflected in the loss of Th1 immune competence observed with AIDS patients.