We have previously observed that HIV-1 replication is suppressed in uninflamed lung and increased during tuberculosis. In vitro THP-1 cell-derived macrophages inhibited HIV-1 replication after infection with Mycobacterium tuberculosis. Suppression of HIV-1 replication was associated with inhibition of the HIV-1 long terminal repeat (LTR) and induction of ISGF-3, a type I interferon (IFN)-specific transcription factor. Repression of the HIV-1 LTR required intact CCAAT/enhancer binding protein (C/EBP) sites. THP-1 cell-derived macrophages infected with M. tuberculosis, lipopolysaccharide, or IFN-β induced the 16-kD inhibitory C/EBPβ isoform and coincidentally repressed HIV-1 LTR transcription. C/EBPβ was the predominant C/EBP family member produced in THP-1 macrophages during HIV-1 LTR repression. In vivo, alveolar macrophages from uninflamed lung strongly expressed inhibitory 16-kD C/EBPβ, but pulmonary tuberculosis abolished inhibitory C/EBPβ expression and induced a novel C/EBP DNA binding protein. Therefore, in vitro, proinflammatory stimulation produces an IFN response inhibiting viral replication by induction of a C/EBPβ transcriptional repressor. THP-1 cell-derived macrophages stimulated with type I IFN are similar to alveolar macrophages in the uninflamed lung in vivo. In contrast, the cellular immune response in active pulmonary tuberculosis disrupts this innate immunity, switching C/EBP expression and allowing high level viral replication.