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-α 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-α-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.