Gene expression of human immunodeficiency virus (HIV) is enhanced by a transactivator, the tat-III protein. There is no direct evidence to indicate transcriptional activation of HIV expression by tat-III. Sensitive in vitro transcription and DNA-binding gel retardation assays have been devised to study the molecular mechanism of HIV gene regulation in vitro. Using the in vitro transcription system, we have demonstrated that the extracts obtained from cells, which produce tat-III, selectively stimulate steady state levels of the transcript from the HIV long terminal repeat (LTR) promoter. The DNA-binding gel retardation assays further demonstrate a stable activated preinitiation complex, formed either by direct binding of tat-III to DNA elements of the HIV-LTR or indirectly, by some other cellular transcription factor(s) mediated and/or induced by tat-III. This data implicates transcription as the site of tat-III action in trans-activation phenomenon. These studies have been further extended to include investigations of the mechanisms of HIV latency in monocytes. Since the monocytes are in the latent (no trans-activation) stage, it is rather difficult to observe expression of the gene at the transcriptional level. Therefore, the latent cells were superinfected by CMV virus or treated with phorbol ester (PMA) to overcome the latency. In vitro transcription, nuclear run-off assays, and Northern analyses of these latently and productively infected monocytes are in progress.