The broad range of histological lesions associated with HIV-1 are somewhat subtle relative to the clinical manifestations that occur as a result of HIV infection. Although it is clear that HIV has a causative role in CNS disease, dementia appears to be a consequence of the infiltration of inflammatory cells and cytokine dysregulation rather than the amount of virus in CNS. The HIV transregulatory protein Tat plays an important intracellular as well as extracellular role in the dysregulation of cytokines. The cytokines and possibly chemokines that are induced by Tat modify the action of astrocytes such that the survival of neurons is compromised. Pathogenetic alteration induced by Tat involves a series of interactions between circulating monocyte/macrophages, endothelial cells, and astrocytes. Cytokine dysregulation induced by viral infection and extracellular Tat leads to alterations in expression of adhesion molecules and promotes migration of non-infected inflammatory cells into the CNS compartment. We demonstrate here that recombinant HIV-1 Tat protein introduced by stereotaxic injection into mouse brain can induce pathologically relevant alterations including macrophage invasion as well as astrocytosis. The mechanism of destruction of the CNS by Tat appears to involve autocrine and paracrine pathways that depend not only on Tat, but cytokine and chemokine signaling pathways that are altered by viral infection. In this review, we discuss various pathogenic effects of Tat in brain cells and provide experimental evidence for an increased TNF-alpha level in CSF in mice injected intracerebrally with Tat protein.