Objectives: To study the biological properties of the immunosuppressive peptide (ISU-peptide) of HIV-1, a 17-mer corresponding to the amino-acid domain 583–599 of the transmembrane glycoprotein gp41 of HIV-1. This peptide exhibits sequence homology to the highly conserved ISU-peptide of type C and D retroviruses. Also, to study the immune response against the corresponding gp41 epitope in AIDS patients. Design: The ISU-peptide and control peptides were synthesized and tested for immunosuppressive activity in different in vitro lymphocyte proliferation assays. Antibody responses were tested using a peptide enzyme-linked immunosorbent assay. A new property of the ISU-peptide, inhibition of HIV-1 replication, was investigated using a cytopathogenicity assay. Results: The ISU-peptide of HIV-1 and the immunosuppressive peptides of type C and type D retroviruses possess similar functional properties. They inhibit mitogen-induced and lymphokine-dependent T-lymphocyte proliferation, they are interspecies-reactive, they must be conjugated to a carrier protein in order to be immunosuppressive, and their N-terminal octamers represent the minimal immunosuppressive domain. HIV-infected individuals develop antibodies against an epitope located at the C-terminal end of the ISU-peptide and the number of responders and antibody titres decrease during progression to AIDS. In addition to its immunosuppressive activity, the ISU-peptide of HIV-1 inhibits the cytopathic effect of HIV-1 on human MT4 cells, suggesting interference with virus replication. Conclusions: The immunosuppressive property of the ISU-peptide suggests that gp41 might contribute to the development of AIDS. The evolutionary conservation of the immunosuppressive domain and the ability of the corresponding ISU-peptide to inhibit HIV replication suggest that this domain plays an important role in the life cycle of HIV-1.