Unexplained debilitating dementia or encephalopathy occurs frequently in adults and children with the acquired immune deficiency syndrome (AIDS). Brains from 15 individuals with AIDS and encephalopathy were examined by Southern analysis and in situ hybridization for the presence of human T-cell leukemia (lymphotropic) virus type III (HTLV-III), the virus believed to be the causative agent of AIDS. HTLV-III DNA was detected in the brains of five patients, and viral-specific RNA was detected in four of these. In view of these findings and the recent demonstration of morphologic and genetic relatedness between HTLV-III and visna virus, a lentivirus that causes a chronic degenerative neurologic disease in sheep, HTLV-III should be evaluated further as a possible cause of AIDS encephalopathy.