The transactivator of transcription (Tat) protein is essential for efficient HIV type 1 (HIV-1) replication and is involved in the transcriptional regulation of the host immune response gene, TNF. In this study, we demonstrate that Tat proteins from representative HIV-1 subtype E isolates, but not from subtypes B or C, selectively inhibit TNF gene transcription and protein production in CD4+ Jurkat T cells. Strikingly, we show that this repression is due to a tryptophan at residue 32 of Tat E and is secondary to interference with recruitment of the histone acetyltransferase P/CAF to the TNF promoter and with chromatin remodeling of the TNF locus. This study presents a novel mechanism by which HIV-1 manipulates a host immune response gene that is important in its own replication. Moreover, these results demonstrate a new mechanism by which the TNF gene is regulated via chromatin remodeling secondary to viral infection.