Human immunodeficiency virus type 1 (HIV-1) protease activity is targeted at nine cleavage sites comprising different amino acid sequences in the viral Gag-Pol polyprotein. Amino acid polymorphisms in protease and in regions of Gag, particularly p7(NC) and the C-cleavage site between p2 and p7(NC), occur in natural variants of HIV-1 within infected patients. Studies were designed to examine the role of natural polymorphisms in protease and to identify determinants in Gag that modulate protease processing activity. Closely related Gag-Pol regions from an HIV-1-infected mother and two children were evaluated for processing in an inducible expression system, for protease activity on cleavage-site analogues, and for impact on replication by recombinant viruses. Gag-Pol regions displayed one of three processing phenotypes based on the appearance of Gag intermediates and accumulation of mature p24(CA). Gag-Pol regions that were processed rapidly to produce p24(CA) resulted in high-level replication by recombinant viruses, while slow-processing Gag-Pol variants resulted in recombinant viruses that replicated with reduced kinetics in both T cell lines and peripheral blood mononuclear cells. Direct impact by Gag sequences on processing by protease was assessed by construction of chimeric Gag-Pol regions and by site-directed mutagenesis. Optimal protease activity occurred when Gag and Pol regions were derived from the same gag-pol allele. Heterologous Gag regions generally diminished rates and extent of protease processing. Natural polymorphisms in novel positions in p7(NC) and the C-cleavage site have a dominant effect on protease processing activity. Accumulation of Gag products after processing at the C site appears to delay subsequent cleavage and production of mature p24(CA).