Caprine arthritis-encephalitis virus is a lentivirus of goats causing encephalomyelopathy acutely in young goats and occasionally in late stages of chronically infected adult goats. To determine the specific brain cells infected by the virus and the response of other cell types, goat cerebrum explant cultures prepared from newborn goat kids were infected by virus application. Infection of brain cultures was also possible by coculture with virus-infected macrophages. Predominantly, microglia cells were specifically infected by the virus, resulting in death of more than 50% of the cells within 2 weeks of infection. Infected cells enlarged and formed multinucleated giant cells. Infection of oligodendrocytes was observed, but infrequently. Astrocytes were not infected. Proviral deoxyribonucleic acid (DNA) was detected in infected cultures by amplification of a 490 base-pair fragment of the viral gag gene by the polymerase chain reaction (PCR) technique. Virus budding from plasma membrane of infected microglia cells was demonstrated by transmission electron microscopy. The supernatant of infected brain cells induced cytopathic effect when applied to indicator cells. These observations suggest productive infection of brain cultures. Virus infection of neurons was not observed. Culture of neurons in virus-free supernatant of CAEV-infected microglia or mixed glia culture resulted in death of 50% of the neurons in 11 days, suggesting the production of neurotoxic substances by the virus-infected glial cells.