Latently infected CD4 T cells form a stable reservoir of HIV that leads to life-long viral persistence; the mechanisms involved in establishment of this latency are not well understood. Three scenarios have been proposed: 1) an activated, proliferating cell becomes infected and reverts back to a resting state; 2) an activated cell becomes infected during its return to resting; or 3) infection is established directly in a resting cell. The aim of this study was, therefore, to investigate the relationship between T cell activation and proliferation and the establishment of HIV latency. Isolated primary CD4 cells were infected at different time points before or after TCR-induced stimulation. Cell proliferation within acutely infected cultures was tracked using CFSE viable dye over 14 days; and cell subsets that underwent varying degrees of proliferation were isolated at end of culture by flow cytometric sorting. Recovered cell subpopulations were analyzed for the amount of integrated HIV DNA, and the ability to produce virus, upon a second round of cell stimulation. We show that cell cultures exposed to virus, prior to stimulus addition, contained the highest levels of integrated and replication-competent provirus after returning to quiescence; whereas, cells infected during the height of cell proliferation retained the least. Cells that did not divide or exhibited limited division, following virus exposure and stimulation contained greater amounts of integrated and inducible HIV than did cells that had divided many times. Based on these results, co-culture experiments were conducted to demonstrate that latent infection could be established directly in non-dividing cells via cell-to-cell transmission from autologous productively infected cells. Together, the findings from our studies implicate the likely importance of direct infection of sub-optimally activated T cells in establishment of latently infected reservoirs in vivo, especially in CD4 lymphocytes that surround productive viral foci within immune tissue microenvironments.