HIV-1 often invades the CNS during primary infection, eventually resulting in neurological disorders in up to 50% of untreated patients. The CNS is a distinct viral reservoir, differing from peripheral tissues in immunological surveillance, target cell characteristics and antiretroviral penetration. Neurotropic HIV-1 likely develops distinct genotypic characteristics in response to this unique selective environment. We sought to catalogue the genetic features of CNS-derived HIV-1 by analysing 456 clonal RNA sequences of the C2-V3 env subregion generated from CSF and plasma of 18 chronically infected individuals. Neuropsychological performance of all subjects was evaluated and summarized as a global deficit score. A battery of phylogenetic, statistical and machine learning tools was applied to these data to identify genetic features associated with HIV-1 neurotropism and neurovirulence. Eleven of 18 individuals exhibited significant viral compartmentalization between blood and CSF (P < 0.01, Slatkin-Maddison test). A CSF-specific genetic signature was identified, comprising positions 9, 13 and 19 of the V3 loop. The residue at position 5 of the V3 loop was highly correlated with neurocognitive deficit (P < 0.0025, Fisher's exact test). Antibody-mediated HIV-1 neutralizing activity was significantly reduced in CSF with respect to autologous blood plasma (P < 0.042, Student's t-test). Accordingly, CSF-derived sequences exhibited constrained diversity and contained fewer glycosylated and positively selected sites. Our results suggest that there are several genetic features that distinguish CSF- and plasma-derived HIV-1 populations, probably reflecting altered cellular entry requirements and decreased immune pressure in the CNS. Furthermore, neurological impairment may be influenced by mutations within the viral V3 loop sequence.