The Human Immunodeficiency Virus type 1 (HIV-1), a member of the lentivirus subfamily, infects both dividing and nondividing cells and, following reverse transcription of the viral RNA genome, integrates into the host chromatin where it enters into a latent state. Many of the factors governing viral latency remain unresolved and current antiviral treatment regimens are largely ineffective at eliminating cellular reservoirs of latent virus. The recent identification of microRNA (miRNA) encoding sequences embedded in the HIV-1 genome, and the discovery of functional virus-derived miRNAs, suggests a role for RNA Interference (RNAi) in the regulation of HIV-1 gene expression. Recently, the mammalian RNAi machinery was shown to regulate gene expression epigenetically by transcriptional modulation, providing a direct link between RNAi and a mechanism for inducing latency. Interestingly, both HIV-1 Tat, and the host TAR RNA-binding protein (TRBP), bind to the transactivating response (TAR) RNA of HIV-1 and affect the function of RNAi in human cells. Specifically, TRBP, a cofactor in Tat-TAR interactions, is a vital component of Dicer-mediated dsRNA processing. These novel observations support a central role for HIV-1 and associated host factors in regulating cellular RNAi and viral gene expression through RNA directed processes. Thus, HIV-1 may have evolved mechanisms to exploit the RNAi pathway at both the transcriptional and posttranscriptional level to affect and/or maintain a latent infection.