Contact of human immunodeficiency virus (HIV)-infected MOLT-4 lymphocytes with epithelial cells derived from small intestine (1407; Intestine 407) resulted in a rapid polar budding of viral particles into an enclosed space formed by interdigitating microvilli of the contacting cells. Electron microscopy showed that released HIV was taken up into the mucosal cell via three independent mechanisms: (1) phagocytosis, (2) coated pits, and (3) direct fusion. Morphological evidence suggests that internalized HIV may escape into the cytoplasm of the target cell by uncoating at the endosomal membrane. Based on CD4 antibody binding and CD4 antibody blocking experiments, HIV entry does not appear to be mediated by a viral CD4 receptor. Productivity of 1407 infection was confirmed by virus isolation from cocultured MT-4 lymphocytic cells, reverse transcriptase assay, p24 antigen ELISA, in situ HIV mRNA hybridization, and Southern dot blot analysis. Contrary to infection with free virus, the cell-to-cell infection was not blocked by anti-gp120 or antiviral serum from HIV-positive individuals. It appears that HIV transmission within the confined space between contacting cells enables HIV to evade immune protection provided by neutralizing antibodies. Our results reveal a mechanism of HIV infection of epithelial cells which is triggered by cell-cell contact. Furthermore, these observations offer an insight into the cellular sequence of events which may take place during sexual transmission of HIV across an intact epithelial barrier.