Mechanisms accounting for HIV-associated suppression of lymphocyte proliferation were investigated. In previous work we demonstrated that purified and inactivated HIV-suppressed lymphoid cell proliferation. In this report we used an inactivated preparation of HIV obtained from infected CEM cells grown in serum free media and demonstrated that this HIV-associated suppression acted in the early steps of activation to inhibit the incorporation of radiolabeled phosphorus into phosphatidylinositol 4,5-bisphosphate and phosphatidic acid. Initially we showed that both purified CD4 and CD8 T lymphocyte subsets were affected and HIV-associated inhibition did not require the CD4 molecule. Impaired lymphocyte blastogenesis (decreased size and granularity and decreased expression of receptors to IL-2 and transferrin) in response to PHA indicated an effect of inactivated HIV on the early steps of activation. This was confirmed by time studies where 1) a 2 min HIV-pretreatment followed by washing before stimulation was sufficient to inhibit PHA induced proliferation of normal lymphocytes, and 2) addition of HIV to PHA prestimulated lymphocytes failed to inhibit proliferation, e.g., there was no effect on preactivated lymphocytes. HIV was mainly inhibitory of lymphocyte proliferation induced by PHA or mAb to the CD3 receptor. In contrast to the effect on the CD3/TiR, responses via the CD2 receptor were not suppressed, e.g., stimulation with the monoclonal antibodies T11(2) + T11(3). Inasmuch as responses by direct A23187 + PMA stimulation of intracellular pathways were also inhibited, it appears that the HIV-induced defect was not (or not only) membrane receptor mediated. The earliest (min) measurable event after stimulation was the initial increase in intracellular Ca2+ which was unaffected by HIV pretreatment. The next measurable event (min to h) of stimulation is a sustained increase in inositol phospholipid turnover. Pretreatment of mononuclear cells with inactivated HIV resulted in a decreased inositol phospholipid turnover as judged from decreased 32P incorporation into phosphatidylinositol 4-phosphate and phosphatidylinositol 4,5-bisphosphate. This led to decreased generation of DAG as reflected in the reduced radiolabeling of its metabolite PA. Reduced availability of DAG presumably interferes with pkC activation and leads to decreased expression of receptors for IL-2 and transferrin and impaired proliferation.