Suppression of dendritic cell (DC) function in HIV-1 infection is thought to contribute to inhibition of immune responses and disease progression, but the mechanism of this suppression remains undetermined. Using the rhesus macaque model, we show B7-H1 (programmed death [PD]-L1) is expressed on lymphoid and mucosal DCs (both myeloid DCs and plasmacytoid DCs), and its expression significantly increases after SIV infection. Meanwhile, its receptor, PD-1, is upregulated on T cells in both peripheral and mucosal tissues and maintained at high levels on SIV-specific CD8(+) T cell clones in chronic infection. However, both B7-H1 and PD-1 expression in SIV controllers was similar to that of controls. Expression of B7-H1 on both peripheral myeloid DCs and plasmacytoid DCs positively correlated with levels of PD-1 on circulating CD4(+) and CD8(+) T cells, viremia, and declining peripheral CD4(+) T cell levels in SIV-infected macaques. Importantly, blocking DC B7-H1 interaction with PD-1(+) T cells could restore SIV-specific CD4(+) and CD8(+) T cell function as evidenced by increased cytokine secretion and proliferative capacity. Combined, the results indicate that interaction of B7-H1-PD-1 between APCs and T cells correlates with impairment of CD4(+) Th cells and CTL responses in vivo, and all are associated with disease progression in SIV infection. Blockade of this pathway may have therapeutic implications for HIV-infected patients.