As the HIV-1 epidemic enters its fourth decade, HIV-1 associated neurological disorders (HAND) continue to be a major concern in the infected population, despite the widespread use of anti-retroviral therapy. Advancing age and increased life expectancy of the HIV-1 infected population have been shown to increase the risk of cognitive dysfunction. Over the past 10 years, there has been a significant progress in our understanding of the mechanisms and the risk factors involved in the development of HAND. Key events that lead up to neuronal damage in HIV-1 infected individuals can be categorized based on the interaction of HIV-1 with the various cell types, including but not limited to macrophages, brain endothelial cells, microglia, astrocytes and the neurons. This review attempts to decipher these interactions, beginning with HIV-1 infection of macrophages and ultimately resulting in the release of neurotoxic viral and host products. These include: interaction with endothelial cells, resulting in the impairment of the blood brain barrier; interaction with the astrocytes, leading to metabolic and neurotransmitter imbalance; interactions with resident immune cells in the brain, leading to release of toxic cytokines and chemokines. We also review the mechanisms underlying neuronal damage caused by the factors mentioned above. We have attempted to bring together recent findings in these areas to help appreciate the viral and host factors that bring about neurological dysfunction. In addition, we review host factors and viral genotypic differences that affect phenotypic pathological outcomes, as well as recent advances in treatment options to specifically address the neurotoxic mechanisms in play.