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CD163 is a hemoglobin scavenger receptor on monocytes and macrophages, cleaved to soluble CD163 (sCD163) in the plasma following activation. In HIV+ adults, sCD163 is linked to non-AIDS morbidity and predicts mortality, but there is limited data in children. We investigated sCD163 levels in HIV+ children and their correlations with disease progression, immune activation and gut mucosal damage.We quantified sCD163 levels in Kenyan children aged 0–20 years with perinatal HIV infection, including 74 antiretroviral treatment (ART)-naïve (ART−) and 64 virally suppressed on ART (ART+), and 79 HIV unexposed-uninfected controls (HIV−). The cohort was divided into age groups 0–5 (younger) and 5–20 (older) years. Correlations between sCD163 and HIV viral load, %CD8+, CD4+ : CD8+ ratio, markers of T-cell activation and proliferation, and gut mucosal damage were also assessed.ART− children have higher sCD163 levels compared with HIV− and ART+ children (P ≤ 0.01); ART+ have equivalent sCD163 levels to HIV− children. In a prospective analysis, sCD163 levels decreased in older ART− children after 12 months of treatment (P < 0.0001). Regardless of age, sCD163 levels correlate with clinical disease progression measured by %CD4+ T cells, CD4+ : CD8+ T-cell ratios and HIV viral load. sCD163 levels directly correlate with T-cell activation markers CD38, human leukocyte antigen-DR isotype, and Ki67 (P ≤ 0.01).High plasma sCD163 levels in HIV+ children correlate with advancing disease and T-cell activation. ART initiation normalizes sCD163 levels and may alleviate HIV-related morbidities and improve long-term pediatric outcomes.