HIV-1 reportedly augments the expression of certain negative costimulatory and inhibitory molecules on T cells, leading to immune impairment. The signaling mechanisms underlying the induction of suppressor molecules and subsequent onset of T-cell impairment in HIV infection remain ambiguous. Our experiments with both autologous and allogeneic T cells exposed to HIV-pulsed dendritic cells showed increased expression of LAG-3, TIM-3, CD160 CTLA-4, TRAIL, and certain suppression-associated transcription factors, namely Blimp-1, DTX1 and FoxP3, whose recruitments were closely regulated by P38MAPK/STAT3 signal transduction pathways. Blockade of P38MAPK/STAT3 significantly decreased the expression of the inhibitory molecules studied and significantly restored T-cell proliferation. The P38MAPK/STAT3 proteins had a higher degree of phosphorylation in the HIV-1-primed cells. We also found that IL-6 and IL-10, and certain other growth factors commonly known to activate STAT3 signaling events were not responsible for STAT3 activation. Blockade of viral CD4 binding and fusion with DCs significantly reduced the negative effects DCs imposed on primed T cells. We concluded that HIV-1 negatively modulate DC functions, causing the activation of the P38MAPK/STAT3 pathway in T cells, leading to recruitment of inhibitory molecules and subsequent onset of T-cell impairment.