The majority of HIV-1-infected neonates and infants have a higher level of viremia and develop AIDS more rapidly than infected adults, including differences seen in clinical manifestations. To determine the mechanisms of HIV-1 infection in neonates vs. adults, we compared the replication kinetics of HIV-1 in neonatal (cord) and adult blood T lymphocytes and monocyte-derived macrophages (MDM) from seven different donors. We found that HIV-1 replicated 3-fold better in cord blood T lymphocytes compared with adult blood T lymphocytes and 9-fold better in cord MDM than adult MDM. We also show that this differential HIV-1 replication did not depend on differences in cell proliferative capabilities, cell surface expression of CD4, CXCR4, and CCR5, or in the amount of PCR products of reverse transcription, DNA synthesis, and translocation of preintegration complex into the nucleus in cord and adult T lymphocytes and MDM. Furthermore, using a single-cycle replication competent HIV-1-NL4-3-Env(-) luciferase amphotropic virus, which measures HIV-1 transcriptional activity independent of receptor and coreceptor expression, we found there was a 3-fold increase of HIV-1 LTR-driven luciferase expression in cord T lymphocytes compared with adult T lymphocytes and 10-fold in cord MDM than in adult MDM. The HIV-1 LTR-driven luciferase expression correlated with HIV-1 LTR transcription, as measured by ribonuclease protection assay. These data suggest that the increased replication of HIV-1 in cord blood compared with adult blood mononuclear cells is regulated at the level of HIV-1 gene expression, resulting in a higher level of viremia and faster disease progression in neonates than adults.