Compartmentalized HIV-1 replication within the central nervous system (CNS) likely provides a foundation for neurocognitive impairment and a potentially important tissue reservoir. The timing of emergence and character of this local CNS replication has not been defined in a population of subjects. We examined the frequency of elevated cerebrospinal fluid (CSF) HIV-1 RNA concentration, the nature of CSF viral populations compared to the blood, and the presence of a cellular inflammatory response (with the potential to bring infected cells into the CNS) using paired CSF and blood samples obtained over the first two years of infection from 72 ART-naïve subjects. Using single genome amplification (SGA) and phylodynamics analysis of full-length env sequences, we compared CSF and blood viral populations in 33 of the 72 subjects. Independent HIV-1 replication in the CNS (compartmentalization) was detected in 20% of sample pairs analyzed by SGA, or 7% of all sample pairs, and was exclusively observed after four months of infection. In subjects with longitudinal sampling, 30% showed evidence of CNS viral replication or pleocytosis/inflammation in at least one time point, and in approximately 16% of subjects we observed evolving CSF/CNS compartmentalized viral replication and/or a marked CSF inflammatory response at multiple time points suggesting an ongoing or recurrent impact of the infection in the CNS. Two subjects had one of two transmitted lineages (or their recombinant) largely sequestered within the CNS shortly after transmission, indicating an additional mechanism for establishing early CNS replication. Transmitted variants were R5 T cell-tropic. Overall, examination of the relationships between CSF viral populations, blood and CSF HIV-1 RNA concentrations, and inflammatory responses suggested four distinct states of viral population dynamics, with associated mechanisms of local viral replication and the early influx of virus into the CNS. This study considerably enhances the generalizability of our results and greatly expands our knowledge of the early interactions of HIV-1 in the CNS.