The human immunodeficiency virus (HIV)-Tat protein has been implicated in the neuropathogenesis of HIV infection. However, its role in modulating astroglial-neuronal relationships is poorly understood. Astrocyte infection with HIV has been associated with rapid progression of dementia. We thus initially transfected astrocytes with HIV proviral DNA and confirmed Tat production in these cells. Subsequently, using stably Tat-producing asytocyte cell lines, we observed that Tat promoted astrocyte survival by causing a prominent antioxidant effect and resistance to cell injury in these cells. Tat was released extracellularly where it could be taken up by other cells. Tat remained functionally active following uptake and caused long terminal repeat (LTR) transactivation in lymphocytic and astrocytic cell lines. Tat released from astrocytes caused mitochondrial dysfunction, trimming of neurites, and cell death in neurons. Tat neurotoxicity was attenuated by anti-Tat antibodies, kynurenate or heparan sulfate. The neurotoxic effects of Tat were caused at concentrations lower than that needed to cause LTR transactivation. When Tat-expressing cells were injected into the rat dentate gyrus, Tat was taken up by granule cells and transported along neuronal pathways to the CA3 region where it caused glial cell activation and neurotoxicity. The arginine-rich domain of Tat was essential for both the LTR transactivation and the neurotoxic properties of Tat. Thus HIV-Tat is a potent neurotoxin that may act at distant sites while at the same time it assures its production by preventing cell death in astrocytes where it is produced.