HIV-1 Tat protein plays various roles in virus proliferation and in the regulation of numerous host cell functions. Accumulating evidence suggests that HIV-1 Tat also plays an important role in HIV-associated neurocognitive disorders (HAND) by disrupting intracellular communication. Amyloid beta (Aβ) is generated from amyloid precursor protein (APP) and accumulates in the senile plaques of Alzheimer's disease patients. This study demonstrates that Tat interacts with APP both in vitro and in vivo, and increases the level of Aβ42 by recruiting APP into lipid rafts. Co-localization of Tat with APP in the cytosol was observed in U-87 MG cells that expressed high levels of Tat, and redistribution of APP into lipid rafts, a site of increased β- and γ-secretase activity, was demonstrated by discontinuous sucrose density gradient ultracentrifugation in the presence of Tat. Furthermore, Tat enhanced the cleavage of APP by β-secretase in vitro, resulting in 5.5-fold higher levels of Aβ42. This was consistent with increased levels of β-C-terminal fragment (β-CTF) and reduced levels of α-CTF. Moreover, stereotaxic injection of a lentiviral Tat expression construct into the hippocampus of APP/presenilin-1 (PS1) transgenic mice resulted in increased Tat-mediated production and processing of Aβ in vivo. Increased levels of Aβ42, as well as an increase in the number and size of Aβ plaques, were observed in the hippocampus following injection of Tat virus compared with mock virus. These results suggest that HIV-1 Tat may contribute to HAND by interacting with and modifying APP processing, thereby increasing Aβ production.