Abstract Background The positive transcription elongation factor b (P-TEFb) is an essential cellular co-factor for the transcription of the human immunodeficiency virus type 1 (HIV-1). The cyclin T1 (CycT1) subunit of P-TEFb associates with a viral protein, Tat, at the transactivation response element (TAR). This represents a critical and necessary step for the stimulation of transcriptional elongation. Therefore, CycT1 may serve as a potential target for the development of anti-HIV therapies. Results To create effective inhibitors of HIV transcription, mutant CycT1 proteins were constructed based upon sequence similarities between CycT1 and other cyclin molecules, as well as the defined crystal structure of CycT1. One of these mutants, termed CycT1-U7, showed a potent dominant negative effect on Tat-dependent HIV transcription despite a remarkably low steady-state expression level. Surprisingly, the expression levels of Tat proteins co-expressed with CycT1-U7 were significantly lower than Tat co-expressed with wild type CycT1. However, the expression levels of CycT1-U7 and Tat were restored by treatment with proteasome inhibitors. Concomitantly, the dominant negative effect of CycT1-U7 was abolished by these inhibitors. Conclusion These results suggest that CycT1-U7 inhibits HIV transcription by promoting a rapid degradation of Tat. These mutant CycT1 proteins represent a novel class of specific inhibitors for HIV transcription that could potentially be used in the design of anti-viral therapy.