Infection with the HIV type 1 (HIV-1) can result both in depletion of CD4(+) T cells and in the generation of dysfunctional CD8(+) T cells. In HIV-1-infected children, repopulation of the peripheral T cell pool is mediated by the thymus, which is itself susceptible to HIV-1 infection. Previous work has shown that MHC class I (MHC I) molecules are strongly up-regulated as result of IFN-alpha secretion in the HIV-1-infected thymus. We demonstrate in this study that increased MHC I up-regulation on thymic epithelial cells and double-positive CD3(-/int)CD4(+)CD8(+) thymocytes correlates with the generation of mature single-positive CD4(-)CD8(+) thymocytes that have low expression of CD8. Treatment of HIV-1-infected thymus with highly active antiretroviral therapy normalizes MHC I expression and surface CD8 expression on such CD4(-)CD8(+) thymocytes. In pediatric patients with possible HIV-1 infection of the thymus, a low CD3 percentage in the peripheral circulation is also associated with a CD8(low) phenotype on circulating CD3(+)CD8(+) T cells. Furthermore, CD8(low) peripheral T cells from these HIV-1(+) pediatric patients are less responsive to stimulation by Ags from CMV. These data indicate that IFN-alpha-mediated MHC I up-regulation on thymic epithelial cells may lead to high avidity interactions with developing double-positive thymocytes and drive the selection of dysfunctional CD3(+)CD8(low) T cells. We suggest that this HIV-1-initiated selection process may contribute to the generation of dysfunctional CD8(+) T cells in HIV-1-infected patients.