We have previously postulated that the binding of the human immunodeficiency virus type 1 (HIV-1) to cell surface CD4 induces signal transduction pathways that down-modulate production of progeny virions in acutely infected T cells (M. Tremblay, S. Meloche, S. Gratton, M. A. Wainberg, and R.-P. Sékaly, EMBO J. 13:774-783, 1994). To evaluate the possibility that CD4 cross-linking might indeed affect viral gene expression, we have introduced a molecular construct made of the luciferase reporter gene placed under the control of the regulatory elements of HIV-1 in several CD4-positive T-cell lines. We found that cross-linking of CD4 with defective HIV-1 particles and heat-inactivated viruses inhibits long terminal repeat-dependent luciferase expression. Experiments revealed that the gp120-CD4 interaction was necessary to repress HIV-1 long terminal repeat-dependent luciferase activity. The cytoplasmic domain of CD4 was also found to be required for this effect to occur. The virus-mediated signal transduction was shown to be mediated via p56lck-dependent and -independent pathways. These results indicate that the earliest event in the HIV-1 replicative cycle, namely, the binding of the virus to its cellular receptor, can lead to signal transduction culminating in down-modulation of viral gene expression. Thus we propose that defective viruses could regulate the pathogenesis of HIV disease as they constitute the vast majority of circulating HIV-1 particles.