Dexamethasone inhibited human immunodeficiency virus type 1 (HIV-1) long terminal repeat (LTR)-directed gene expression in cells of T and B lymphoblastoid lineages, but not in monocytic cells. Suppression required an intact glucocorticoid receptor (GR), as it was amplified by transfection of lymphocytes with a plasmid encoding the human GR and blocked by the receptor antagonist RU486. These results were in direct contrast to the effects of dexamethasone on a murine leukemia retrovirus promoter where, consistent with the findings of others, activation of gene expression was obtained. Potential regions of the HIV-1 LTR mediating these effects were sought, with sequence homologies predicting two new glucocorticoid response element half-sites, GRE-II (nucleotides -6 to -1) and GRE-III (+ 15 to + 20), downstream from a previously identified GR DNA binding domain, GRE-I (-264 to -259). Mutational analyses documented the loss of inhibitory activity attendant on changes in GRE-III and the independence of steroid-mediated effects from GRE-I and GRE-II. Consistent with these findings, electrophoretic mobility shift assays revealed a difference in binding of cellular factors to GRE-III in cells of T and B lymphocyte vs. monocytic lineages. Binding sites for the cellular transcription factor leader binding protein (LBP-1) were found to overlap with GRE-III, and LBP-1 interacted with this element in the HIV LTR only in T and B lymphocytic extracts. We hypothesize that GRE-III sequence-specific effects, including modulation of LBP-GR interactions, underlie the negative regulatory effect of glucocorticoids on HIV-1 gene expression, with some specificity for cell type.