We presently describe the full-length cloning and functional characterization of an HIV-1-inducible gene, astrocyte elevated gene (AEG)-1. Additionally, a novel method is outlined for producing tag-free recombinant protein in a baculovirus system and its use in producing AEG-1 protein. AEG-1 mRNA is expressed ubiquitously with higher expression in tissues containing muscular actin and its expression is increased in astrocytes infected with HIV-1 or treated with gp120 or tumor necrosis factor (TNF)-alpha. The mRNA encodes a single pass transmembrane protein of predicted molecular mass of 64-kDa and pI 9.3 that predominantly localizes in the endoplasmic reticulum and perinuclear region. Ectopic expression of AEG-1 inhibits excitatory amino acid transporter 2 (EAAT2) promoter activity with the potential to promote glutamate excitotoxicity and consequently HIV-1-associated dementia (HAD). AEG-1 expression is elevated in subsets of breast carcinomas, malignant gliomas and melanomas and it synergizes with oncogenic Ha-ras to enhance soft agar colony forming ability of non-tumorigenic immortalized melanocytes, documenting its tumor promoting activity. AEG-1 may affect tumor progression in multiple cell lineages by augmenting expression of the transformed phenotype and/or by inducing glutamate excitotoxicity in malignant glioma. In these contexts, an HIV-1-inducible gene, AEG-1, may contribute to multiple brain abnormalities, including HAD and tumor formation, by both common and distinct mechanisms.