We have examined the feasibility of using interferon (IFN) gene transfer as a novel approach to anti-human immunodeficiency virus type 1 (HIV-1) therapy in this study. To limit expression of a transduced HIV-1 long terminal repeat (LTR)-IFNA2 (the new approved nomenclature for IFN genes is used throughout this article) hybrid gene to the HIV-1-infected cells, HIV-1 LTR was modified. Deletion of the NF-kappa B elements of the HIV-1 LTR significantly inhibited Tat-mediated transactivation in T-cell lines, as well as in a monocyte line, U937. Replacement of the NF-kappa B elements in the HIV-1 LTR by a DNA fragment derived from the 5'-flanking region of IFN-stimulated gene 15 (ISG15), containing the IFN-stimulated response element, partially restored Tat-mediated activation of LTR in T cells as well as in monocytes. Insertion of this chimeric promoter (ISG15 LTR) upstream of the human IFNA2 gene directed high levels of IFN synthesis in Tat-expressing cells, while this promoter was not responsive to tumor necrosis factor alpha-mediated activation. ISG15-LTR-IFN hybrid gene inserted into the retrovirus vector was transduced into Jurkat and U937 cells. Selected transfected clones produced low levels of IFN A (IFNA) constitutively, and their abilities to express interleukin-2 and interleukin-2 receptor upon stimulation with phytohemagglutinin and phorbol myristate acetate were retained. Enhancement of IFNA synthesis observed upon HIV-1 infection resulted in significant inhibition of HIV-1 replication for a period of at least 30 days. Virus isolated from IFNA-producing cells was able to replicate in the U937 cells but did not replicate efficiently in U937 cells transduced with the IFNA gene. These results suggest that targeting IFN synthesis to HIV-1-infected cells is an attainable goal and that autocrine IFN synthesis results in a long-lasting and permanent suppression of HIV-1 replication.