Human immunodeficiency virus type 1 (HIV-1) transcription is subject to substantial fluctuation during the viral life cycle. Due to the low frequencies of HIV-1-infected cells, and because latently and productively infected cells collocate in vivo, little quantitative knowledge has been attained about the range of in vivo HIV-1 transcription in peripheral blood mononuclear cells (PBMC). By combining cell sorting, terminal dilution of intact cells, and highly sensitive, patient-specific PCR assays, we divided PBMC obtained from HIV-1-infected patients according to their degree of viral transcription activity and their cellular phenotype. Regardless of a patient's treatment status, the bulk of infected cells exhibited a CD4⁺ phenotype but transcribed HIV-1 provirus at low levels, presumably insufficient for virion production. Furthermore, the expression of activation markers on the surface of these CD4⁺ T lymphocytes showed little or no association with enhancement of viral transcription. In contrast, HIV-infected T lymphocytes of a CD4⁻/CD8⁻ phenotype, occurring exclusively in untreated patients, exhibited elevated viral transcription rates. This cell type harbored a substantial proportion of all HIV RNA⁺ cells and intracellular viral RNAs and the majority of cell-associated virus particles. In conjunction with the observation that the HIV quasispecies in CD4⁺ and CD4⁻/CD8⁻ T cells were phylogenetically closely related, these findings provide evidence that CD4 expression is downmodulated during the transition to productive infection in vivo. The abundance of viral RNA in CD4⁻/CD8⁻ T cells from viremic patients and the almost complete absence of viral DNA and RNA in this cell type during antiretroviral treatment identify HIV⁺ CD4⁻/CD8 T cells as the major cell type harboring productive infection in peripheral blood.