LY6E is a glycosylphosphatidylinositol-anchored, IFN-inducible protein that regulates T lymphocytes proliferation, differentiation, and development. Single-nucleotide polymorphism rs2572886 in the LY6 family protein locus has been shown to associate with accelerated progression to AIDS. In this study, we show that LY6E promotes HIV, type 1 (HIV-1) infection by enhancing viral entry and gene expression. Knockdown of LY6E in human peripheral blood mononuclear, SupT1, and THP-1 cells diminishes HIV-1 replication. Virion-cell and cell-cell fusion experiments revealed that LY6E promotes membrane fusion of the viral entry step. Interestingly, we find that LTR-driven HIV-1 gene expression is also enhanced by LY6E, suggesting additional roles of LY6E in HIV-1 replication. HIV-1 infection induces LY6E expression in human peripheral blood mononuclear cells, concomitant with increased production of type I IFN and some classical IFN-stimulated genes. Altogether, our results demonstrate that IFN-inducible LY6E promotes HIV-1 entry and replication and highlight a positive regulatory role of IFN-induced proteins in HIV-1 infection. Our work emphasizes the complexity of IFN-mediated signaling in HIV-host interaction and AIDS pathogenesis.