The human immunodeficiency virus type 1 long terminal repeat, HIV-1-LTR, contains binding sites for several cellular transcription factors which contribute to HIV-1 gene expression. Our previous studies on the function of the HIV-1-encoded Nef protein suggested that Nef may be an inhibitor HIV-1 transcription. To determine whether Nef affects the binding of cellular factors implicated in HIV-1 regulation, 32P-labeled oligonucleotides corresponding to the binding sites were incubated with nuclear extracts prepared from Nef-expressing T-cell lines that were not stimulated or were stimulated with T-cell mitogens. We found that Nef inhibited the recruitment of AP-1 DNA-binding activity in mitogen-stimulated human T-cells. Additionally, Nef expressing cells were transiently transfected with a plasmid in which HIV-1 AP-1 DNA recognition sequences were cloned downstream of the chloramphenicol acetyltransferase (CAT) gene. Mitogen-mediated transcriptional activation of the CAT gene in this construct was inhibited in Nef-expressing cells but not in control cells. These studies suggest that, by inhibiting AP-1 activation, Nef may play a role in regulating HIV-1 gene expression in infected T-cells.