The retrovirus that causes acquired immune deficiency syndrome (AIDS) is now designated the human immunodeficiency virus (HIV). The cerebrospinal fluid (CSF) of 27 children with HIV infection was assayed for intra-blood-brain barrier (IBBB) synthesis of HIV-specific antibodies and for the presence of HIV antigen. In this cohort, 11 children had a progressive encephalopathy (PE), 9 had a static encephalopathy (SE), and 7 had normal neurological findings (N). IBBB synthesis of HIV-specific antibodies was identified (using matched serum and CSF specimens) in 7 of 11 children with PE, 4 of 9 children with SE, and 2 of 7 children with N. HIV antigen was found (using a highly sensitive solid-phase enzyme immunoassay) in the CSF of 8 of 11 children with PE, none of the children with SE, and none of the 7 children with N. On the basis of these data, we conclude that: IBBB synthesis of HIV antibodies indicates invasion of the central nervous system but may reflect prior or current infection; and HIV antigen in CSF indicates viral expression and correlates with the occurrence of PE. These findings strongly implicate HIV as the causative agent of PE in these children. The assay for HIV antigen in the CSF may be of value in determining the prognosis of children with HIV infection and for evaluating the efficacy of therapeutic agents against this retrovirus.