Our objective was to determine whether monitoring HIV-1 DNA concentration or new resistance mutations in peripheral blood mononuclear cells (PBMCs) during effective antiretroviral therapy (ART) predicts virologic failure. A retrospective analysis used blood specimens and clinical data from three nevirapine containing arms of a four-arm, open-label, randomized trial comparing ART regimens in HIV-1-infected children who had failed mono- or dual-nucleoside therapy. Sensitive assays compared cell-associated HIV-1 DNA concentrations and nevirapine (NVP) and lamivudine (3TC) resistance mutations in children with plasma HIV-1 RNA <400 copies(c)/ml who did or did not experience subsequent virologic failure. Forty-six children were analyzed through the last available follow-up specimen, collected at 48 (n=16) or 96 (n=30) weeks of ART. Thirty-five (76%) had sustained viral suppression and 11 (24%) had plasma viral rebound to ≥ 400 c/ml (virologic failure detected at a median of 36 weeks). HIV-1 DNA levels at baseline, 24, 48, and 96 weeks of ART were similar in children who did vs. did not experience virologic failure (p=0.82). HIV-1 DNA levels did not increase prior to viral rebound. NVP resistance mutations were detected in 91% of subjects in the failure group vs. 3% in the suppressed group (p <0.0001). Among nine evaluable children, NVP mutations were first detected prior to virologic failure in two (22%), at viral rebound in five (56%), and after failure in two (22%) children. HIV-1 DNA concentrations did not predict virologic failure in this cohort. New drug resistance mutations were detected in the PBMCs of a minority of virologically suppressed children who subsequently failed ART.