The effects of HIV-1 encoded proteins NCp7, vpr and NCp7:vpr complex on the activity of protein phosphatase-2A0 have been tested. We report that NCp7 is an activator of protein phosphatase-2A0 and that vpr activated protein phosphatase-2A0 only slightly. We also report that NCp7 and vpr form a tight complex which becomes a more potent activator of protein phosphatase-2A0 than NCp7 alone. The ability of NCp7 to activate protein phosphatase-2A0 is regulated by vpr. The C-terminal portion of vpr prevents NCp7 from activating protein phosphatase-2A0 while the N-terminal portion of vpr potentiates the effect of NCp7 on the activity of protein phosphatase-2A0. Our findings indicate that vpr may be acting as a targeting subunit which directs NCp7 to activate protein phosphatase-2A0. In view of the fact that protein phosphatase-2A functions as an inhibitor of G0 to M transition of the cell cycle and is involved in other key cellular processes such as the control of RNA transcription, the results presented in this report may explain how HIV-1 causes cell cycle arrest which may lead to CD4+ T cell depletion and also how it disturbs normal cellular processes of its host cell.