The latent reservoir for HIV-1 in resting memory CD4⁺ T cells is the major barrier to curing HIV-1 infection. Studies of HIV-1 latency have focused on regulation of viral gene expression in cells in which latent infection is established. However, it remains unclear how infection initially becomes latent. Here we described a unique set of properties of CD4⁺ T cells undergoing effector-to-memory transition including temporary upregulation of CCR5 expression and rapid downregulation of cellular gene transcription. These cells allowed completion of steps in the HIV-1 life cycle through integration but suppressed HIV-1 gene transcription, thus allowing the establishment of latency. CD4⁺ T cells in this stage were substantially more permissive for HIV-1 latent infection than other CD4⁺ T cells. Establishment of latent HIV-1 infection in CD4⁺ T could be inhibited by viral-specific CD8⁺ T cells, a result with implications for elimination of latent HIV-1 infection by T cell-based vaccines.