Human immunodeficiency virus (HIV) was detected ultrastructurally and immunohistochemically in the brain of a Japanese hemophiliac presenting AIDS encephalopathy. The encephalopathy was characterized by the multifocal occurrence of multinucleated giant cells mainly in the subcortical areas. The giant cells were identified immunohistochemically to be macrophages. HIV particles were observed in and out of the giant cells, and most of the particles ingested in the cells were membrane-bound. Some virus particles were found in pinocytic vesicles or phagocytic vacuoles, whereas the others were degradated in the lysosomes of the cells. Budding of HIV particles from the cell surface was also observed, indicating replication of the virus in vivo. These findings suggest ingestion, digestion, and replication of HIV by brain macrophages in AIDS.