Microglial cell activation, myelin alteration, and abundant tumor necrosis factor (TNF)-alpha message have been observed in the brains of some human immunodeficiency virus type 1 (HIV-1)-infected and demented patients. We therefore used cultures of purified human microglia and oligodendrocytes derived from adult human brain to examine the role of TNF-alpha in HIV-1 encephalopathy. Human microglia synthesize TNF-alpha message and protein in vitro. When these cells were infected with HIV-1 JrFL and maintained in the presence of TNF-alpha antibodies, soluble TNF-alpha receptors, or the TNF-alpha inhibitor pentoxifylline, viral replication was delayed or strongly inhibited. Both human microglia and oligodendrocytes express the two TNF receptors, TNF-R1, which has been implicated in cytotoxicity, and TNF-R2. While TNF-alpha may enhance HIV-1 replication in an autocrine manner, it is not toxic for microglia. In contrast, recombinant human TNF-alpha causes oligodendrocyte death in a dose-dependent manner. In situ detection of DNA fragmentation in some cells indicated that oligodendrocyte death may occur by apoptosis. Addition of live microglia or medium conditioned by these cells also resulted in 30 to 40% oligodendrocyte death, which was largely prevented by TNF-alpha inhibitors. We propose that TNF-alpha plays a dual role in HIV-1 encephalopathy, enhancing viral replication by activated microglia and damaging oligodendrocytes. Thus, TNF-alpha inhibitors may alleviate some of the neurological manifestations of acquired immunodeficiency syndrome.