Human immunodeficiency virus type 1 (HIV-1) isolates from perinatally infected infants and children were examined for syncytium-inducing (SI) capacity. All isolates from 14 infants < 1 year old had non-syncytium-inducing (NSI) HIV-1 phenotypes. Within their first year, 10 infants progressed to AIDS and 3 died. Of isolates from 26 children > 2 years old, 13 had SI HIV-1 phenotypes and 13 had NSI strains. Children with SI virus had significantly lower CD4+ cell counts standardized for age and were significantly older than those with NSI strains (P = .008 and .001, respectively); the effect of viral phenotype on CD4+ lymphocytes could not be detected independent of age. In another group, children with SI strains were more likely to show in vitro zidovudine resistance. Results suggest a biphasic response to HIV infection in children. Progression to AIDS may occur rapidly in infants with NSI HIV-1, but older children tend to have SI phenotypes and lower CD4+ lymphocyte counts and more often show zidovudine resistance.