Crack cocaine use is associated with impaired verbal memory in HIV-infected women more than uninfected women. To understand the neural basis for this impairment, this study examined the effects of crack cocaine use on activation of the prefrontal cortex (PFC) and strategic encoding during a verbal memory task in HIV-infected women. Three groups of HIV-infected women from the Chicago Consortium of the Women's Interagency HIV Study were compared: current users of crack cocaine (n = 10), former users of cocaine (n = 11), and women who had never used cocaine (n = 9). Participants underwent functional magnetic resonance imaging during a verbal memory task and completed a neuropsychological test of verbal memory. On the neuropsychological test, current crack users performed significantly worse than other groups on semantic clustering, a measure of strategic encoding, p < 0.05. During encoding, activation in left anterior cingulate cortex (ACC) was lower in current and former cocaine users compared to never users. During recognition, activation in bilateral PFC, specifically left dorsal medial PFC and bilateral dorsolateral PFC, was lower in current and former users compared to women who had never used cocaine. Lower activation in left dorsolateral PFC was correlated with worse performance on the recognition task, p < 0.05. The verbal learning and memory deficits associated with cocaine use in women with HIV may be partially accounted for by alterations in ACC and PFC function.