Impaired adaptive immunity is the hallmark of AIDS, but the effects of human immunodeficiency virus type 1 (HIV-1) infection on innate immunity are less clear. Cryptococcus neoformans (CN) is a common AIDS-related fungal pathogen acquired by inhalation. Alveolar macrophages (AM) comprise the initial host defense in cryptococcosis and they may arrest infection before dissemination occurs. We hypothesized that HIV-1 infection of AM impairs their anti-cryptococcal activity. This was tested by infection of normal AM with the M-tropic strain HIV-1(Bal). Two weeks postinfection we measured fungistatic activity against CN by colony counting, binding, and internalization of CN by confocal microscopy and AM cell viability by Alamar Blue assay. Uninfected AM from most donors demonstrated innate fungicidal activity against CN. In HIV-1-infected AM, there was a significant reduction, and in most cases loss, of fungicidal activity compared with the uninfected AM. The reduced antifungal activity was not due to any cytotoxic effect of HIV-1, and HIV-1 infection did not impair binding or internalization of yeast by AM. Thus, the innate fungicidal activity of primary human AM is impaired after HIV-1 infection in vitro by a mechanism involving a defect of intracellular antimicrobial processing.