Proteinase-activated receptors (PARs), a newly discovered subgroup of G-protein coupled receptors, are widely expressed by neural cells, but their roles in the nervous system remain uncertain. In this study, we report that PAR-2 was up-regulated on neurons in conjunction with neuroinflammation in brain tissue from patients with HIV-1-associated dementia. The inflammatory cytokines TNF-alpha and IL-1beta were also increased in HIV-1-associated dementia brains compared with patients without dementia (p < 0.05), but these same cytokines induced PAR-2 expression on neurons. Enhanced PAR-2 expression and subsequent activation prevented neuronal cell death and induction of the tumor suppressor, p53, caused by the HIV-encoded protein, Tat (p < 0.01). Intrastriatal implantation of a PAR-2 peptide agonist also inhibited Tat-induced neurotoxicity in a mouse model of HIV neuropathogenesis (p < 0.05). Moreover, PAR-2 null animals showed more severe neuroinflammation and neuronal loss caused by Tat neurotoxicity (p < 0.05). TNF-alpha protected wild-type neurons from Tat-related neurotoxicity, but in PAR-2-deficient neurons, the same concentrations of TNF-alpha were cytotoxic (p < 0.001). Thus, neuroinflammation can exert protective effects by which it induces PAR-2 expression with the ensuing abrogation of neuronal death.