Recent studies in our laboratory and that of Dr. Howard Gendelman have revealed two important pathways for neuronal damage during HIV-1 encephalopathy in children. First, substantial numbers of astrocytes are actively or latently infected with HIV-1. Astrocyte infection may lead to neuronal dysfunction through loss of supporting growth factors, excitotoxicity due to dysregulation of neurotransmitter reuptake, and loosening of the blood-brain barrier permitting further seeding of HIV-1 in the CNS. Significantly, infection of astrocytes is marked by near-exclusive synthesis of early regulatory gene products of HIV-1, while structural proteins characteristic of productive infection are found in macrophages, microglia and multinucleated giant cells. We propose the term 'restricted' to denote the non-productive infection found in astrocytes. Second, HIV-1-infected macrophages initiate inflammatory processes which are amplified through cell-cell interactions with astrocytes. Macrophage-astrocyte interactions produce arachidonic metabolites and potentially neurotoxic cytokines (TNF-alpha and IL-1 beta), leading to astroglial activation and proliferation which then amplifies these cellular processes. These new findings suggest that two major pathways leading to neurotoxicity in pediatric AIDS encephalopathy are linked to HIV-1 infection through astrocyte-mediated processes, and help explain how small numbers of productivity infected cells indirectly cause widespread tissue pathology and elicit profound neurological impairment.