Human immunodeficiency virus type 1 (HIV-1) gene expression is regulated by interactions between both viral and host factors. These interactions are also responsible for changes in the expression of many host cell genes, including cytokines and other immune regulators, which may account for the state of immunological dysregulation that characterizes HIV-1 infection. We have investigated the role of a host cell protein, the transcription factor NFAT1, in HIV-1 pathogenesis. We show that NFAT1 interacts with Tat and that this interaction, which involves the major transactivation domain of NFAT1 and the amino-terminal region of Tat, results in a reciprocal modulatory interplay between the proteins: whereas Tat enhances NFAT1-driven transcription in Jurkat T cells, NFAT1 represses Tat-mediated transactivation of the HIV-1 long terminal repeat (LTR). Moreover, NFAT1 binds to the kappaB sites on the viral LTR and negatively regulates NF-kappaB-mediated activation of HIV-1 transcription, by competing with NF-kappaB1 for its binding sites on the HIV-1 LTR. Tat-mediated enhancement of NFAT1 transactivation may explain the upregulation of interleukin 2 and other cytokines that occurs during HIV-1 infection. We discuss the potentially opposing roles of NFAT1 and another family member, NFAT2, in regulating gene transcription of HIV-1 and endogenous cytokine genes.