While exploring the effects of aerosol IFN-γ treatment in HIV-1/tuberculosis co-infected patients, we observed A to G mutations in HIV-1 envelope sequences derived from bronchoalveolar lavage (BAL) of aerosol IFN-γ-treated patients and induction of adenosine deaminase acting on RNA 1 (ADAR1) in the BAL cells. IFN-γ induced ADAR1 expression in monocyte-derived macrophages (MDM) but not T cells. ADAR1 siRNA knockdown induced HIV-1 expression in BAL cells of four HIV-1 infected patients on antiretroviral therapy. Similar results were obtained in MDM that were HIV-1 infected in vitro. Over-expression of ADAR1 in transformed macrophages inhibited HIV-1 viral replication but not viral transcription measured by nuclear run-on, suggesting that ADAR1 acts post-transcriptionally. The A to G hyper-mutation pattern observed in ADAR1 over-expressing cells in vitro was similar to that found in the lungs of HIV-1 infected patients treated with aerosol IFN-γ suggesting the model accurately represented alveolar macrophages. Together, these results indicate that ADAR1 restricts HIV-1 replication post-transcriptionally in macrophages harboring HIV-1 provirus. ADAR1 may therefore contribute to viral latency in macrophages.