HIV-1 remains an incurable infection that is associated with substantial economic and epidemiologic impacts. HIV-associated neurocognitive disorders (HAND) are commonly linked with HIV-1 infection; despite the development of combination antiretroviral therapy (cART), HAND is still reported to affect at least 50% of HIV-1 infected individuals. It is believed that the over-amplification of inflammatory pathways, along with release of toxic viral proteins from infected cells, are primarily responsible for the neurological damage that is observed in HAND; however, the underlying mechanisms are not well-defined. Therefore, there is an unmet need to develop more physiologically relevant and reliable platforms for studying these pathologies. In recent years, neurospheres derived from induced pluripotent stem cells (iPSCs) have been utilized to model the effects of different neurotropic viruses. Here, we report the generation of neurospheres from iPSC-derived neural progenitor cells (NPCs). We show, for what we believed to be the first time, that these cultures are susceptible to retroviral (e.g. HIV-1, HTLV-1) infection. In addition, we also examine the functional effects of stem cell derived extracellular vesicles (EVs) on HIV-1 damaged cells as there is abundant literature supporting the reparative and regenerative properties of stem cell EVs in the context of various CNS pathologies. Consistent with the literature, our data suggests that stem cell EVs may modulate neuroprotective and anti-inflammatory properties in damaged cells. Collectively, this study demonstrates the feasibility of NPC-derived neurospheres for modeling HIV-1 infection and, subsequently, highlights the potential of stem cell EVs for rescuing cellular damage induced by HIV-1 infection.