BACKGROUND: Genetic diversity of the human immunodeficiency virus type 1 (HIV-1) population within an individual is lost during transmission to a new host. The demography of transmission is an important determinant of evolutionary dynamics, particularly the relative impact of natural selection and genetic drift immediately following HIV-1 infection. Despite this, the magnitude of this population bottleneck is unclear. RESULTS: We use coalescent methods to quantify the bottleneck in a single case of homosexual transmission and find that over 99% of the env and gag diversity present in the donor is lost. This was consistent with the diversity present at seroconversion in nine other horizontally infected individuals. Furthermore, we estimated viral diversity at birth in 27 infants infected through vertical transmission and found there to be no difference between the two modes of transmission. CONCLUSION: Assuming the bottleneck at transmission is selectively neutral, such a severe reduction in genetic diversity has important implications for adaptation in HIV-1, since beneficial mutations have a reduced chance of transmission.