Herpesvirus saimiri (HVS)-transformed human T cells become permissive for X4 and R5 strains of human immunodeficiency virus type 1 (HIV-1), evidence that HVS-encoded proteins associated with T cell transformation enhance HIV-1 replication. Analyzing the contribution of transformation-associated bicistronic HVS open reading frames (ORF) to HIV-1 replication revealed expression of the second ORF saimiri transformation-associated protein type C (StpC) conferred the permissive phenotype to T cells. In contrast, expression of the first HVS ORF tyrosine-kinase interacting protein (Tip) in the absence of StpC enhanced restriction of HIV-1 replication in T cell lines and peripheral blood mononuclear cells. Understanding the mechanism whereby Tip enhanced restriction of HIV-1 replication may uncover unique pathways that could be targeted therapeutically. Here we report that Tip restricts HIV-1 replication in a monocyte-derived cell line and restricts reactivation of replication of HIV-1 in a T cell line harboring provirus. In this report, we begin to unravel the molecular underpinnings of Tip-mediated restriction. Tip mediates both lymphocyte-cell-specific kinase (Lck)-dependent and -independent effects on HIV-1 replication. We also provide evidence that Tip-mediated restriction is in part due to inhibition of Tat transactivation of the HIV-1 long terminal repeat (LTR). Expression of Tip in T cells increased activation of Stat1 and Stat3, as well as activation of protein kinase RNA-dependent (PKR/p68) and interferon-gamma production. Taken together, these results provide evidence that Tip restricts HIV-1 replication and reactivation by inhibiting HIV-1 transcription while inducing an intercellular antiviral state. We propose that genetically engineered vectors driving Tip expression could provide a prototypic strategy for restricting HIV-1 replication and reactivation in diverse cell lineages.