The direct link between sustained type I interferon (IFN-I) signaling and HIV-1-induced immunopathogenesis during chronic infection remains unclear. Here we report studies using a monoclonal antibody to block IFN-α/β receptor 1 (IFNAR1) signaling during persistent HIV-1 infection in humanized mice (hu-mice). We discovered that, during chronic HIV-1 infection, IFNAR blockade increased viral replication, which was correlated with elevated T cell activation. Thus, IFN-Is suppress HIV-1 replication during the chronic phase but are not essential for HIV-1-induced aberrant immune activation. Surprisingly, IFNAR blockade rescued both total human T cell and HIV-specific T cell numbers despite elevated HIV-1 replication and immune activation. We showed that IFNAR blockade reduced HIV-1-induced apoptosis of CD4+ T cells. Importantly, IFNAR blockade also rescued the function of human T cells, including HIV-1-specific CD8+ and CD4+ T cells. We conclude that during persistent HIV-1 infection, IFN-Is suppress HIV-1 replication, but contribute to depletion and dysfunction of T cells.