The degree of neuronal damage in HIV encephalitis (HIVE) and the mechanisms leading to it are not known. Post-mortem human studies provide limited information concerning pathogenesis, and there are few animal models of HIVE. We have developed a murine model of HIVE based on HIV-infected human brain tissues grafted within the host CNS milieu. HIV-infected blood-derived macrophages were cocultured with and incorporated within second trimester human fetal brain neuroglia. Mixed neuronal-glial aggregates were injected into the striatum of SCID mice where they survived for more than 6 months. Cellular proliferation and differentiation were determined by immunohistochemical staining for proliferating cell nuclear antigen and cellular markers. Synapse formation was seen by immunocytochemistry for synapsin and by electron microscopy. Virus was detected by immunohistochemical staining for HIV gp41. Based on the long-term survival of human neuroglial xenografts containing HIV infected macrophages, we believe that this model will support the study of chronic HIV-associated neurodegeneration and the testing of various CNS targeted therapeutic interventions.