Transgenic mice bearing HIV-1 proviral DNA deleted in the gag/pol region (HIVd1443 mice) model a chronic, nonproductive form of viral gene expression in various cell types including macrophages. They display a disease phenotype that includes HIV-associated nephropathy (HIVAN), congenital cataracts, papillomatosis, and growth failure. The role of HIV-1 Nef in viral gene regulation and the development of disease was explored in mice bearing an isogenic HIV transgene in which nef was mutated by frameshift mutation. Like its Nef+ counterpart, HIVd1443[Nef-] mice expressed HIV gene products in the skin, muscle, kidney, and peritoneal macrophages. While these mice did not develop cataracts, papillomatous skin lesions, or display any apparent growth defect, they did develop HIVAN. Nef expression was introduced to HIVd1443[Nef-] mice through breeding to mice bearing an HIV LTR-linked nef transgene. Nef-complemented HIVd1443[Nef-] mice had reduced levels of viral gene products in the muscle and kidney. In contrast, HIV gene expression in the skin of these mice remained high and papillomatous lesions emerged that were more severe than those on wild-type HIVd1443 mice. Still, Nef had a negative effect on LPS-induced viral gene expression in visibly normal skin. In comparisons of peritoneal macrophages, viral RNA expression was significantly reduced in resident macrophages of Nef+ mice. HIV inflammatory macrophages expressed viral genes and displayed an altered FACS profile. In particular, Nef+ populations were marked by an increased proportion of F4/80med/Mac-1-cells as well as fewer Mac-1 cells and reduced F4/80 staining. This HIV proviral transgenic model has demonstrated the capacity of HIV-1 Nef to contribute to HIV cytopathicity by altering cellular maturation and viral gene expression in vivo.