Dimyristoylphosphatidylazidothymidine has been shown to inhibit human immunodeficiency virus (HIV) replication in CEM or U937 cells infected with the LAV-1 strain in vitro, but its metabolism and mechanism of antiretroviral activity have not been determined (Hostetler, K. Y., Stuhmiller, L. M., Lenting, H. B. M., van den Bosch, H., and Richman, D. D., J. Biol. Chem. (1990) 265, 6112-6117). We synthesized phosphatidylazidothymidine labeled with tritium in the 5'-position of dideoxyribose and incubated the phospholipid prodrug with CEM cells for 24 h. The radioactive products were analyzed by high pressure liquid chromatography and thin layer chromatography. Phosphatidylazidothymidine is deacylated by cellular phospholipases A to lysophosphatidylazidothymidine, which is subsequently hydrolyzed to glycero-3-phospho-5'-azidothymidine by lysophospholipases. Phosphodiesteratic cleavage of glycero-3-phospho-5'-azidothymidine occurs with formation of azidothymidine (AZT) or AZT-5'-monophosphate. Anabolic phosphorylation leads to the formation of AZT-diphosphate and AZT-triphosphate. To evaluate the possibility of direct inhibition of HIV reverse transcriptase by phosphatidyl-AZT, lysophosphatidyl-AZT or glycero-3-phospho-5'-AZT, we synthesized these compounds and found them to lack the ability to inhibit HIV recombinant reverse transcriptase in vitro. AZT-triphosphate was greater than 10,000 times more potent in inhibiting reverse transcriptase activity. Thus, phosphatidyl-AZT exerts its antiviral activity by metabolic conversion to AZT-triphosphate. Phospholipid prodrugs of this type may be useful in treating the macrophage reservoir of HIV infection.