Targeting host cell factors involved in the regulation of HIV-1 replication might be one way to overcome the resistance of HIV-1 to anti-viral agents. Transcription of HIV-1 genes is activated by HIV-1 Tat protein that induces phosphorylation of the C-terminal domain of RNA polymerase-II by CDK9/cyclin T1. We previously showed that HIV-1 Tat interacts with host cell protein phosphatase-1 (PP1) and that disruption of this interaction prevents induction of HIV-1 transcription. We demonstrate here that PP1 dephosphorylates CDK9 that was phosphorylated in vivo, and that Ser175 and Thr186 residues of CDK9 were dephosphorylated by PP1. Mutation S175A increased CDK9 activity and induced HIV-1 transcription, whereas T186A mutant of CDK9 was not active. Previously, phosphorylation of CDK9’s Thr186 was shown to require for the binding of CDK9/cyclin T1 to 7SK RNA and also for the enzymatic activity of CDK9. In agreement with this finding, expression of a PP1 inhibitor, the central domain of NIPP1 (cdNIPP1) cdNIPP1 increased association of CDK9/cyclin T1 with 7SK RNA. Expression of cdNIPP1 strongly inhibited HIV-1 transcription. Furthermore, expression of cdNIPP1 as part of HIV-1 genome strongly inhibited HIV-1 viral replication. Our study shows that nuclear PP1 might control cellular activity of CDK9 by modulating its association with 7SK RNA and also by controlling the enzymatic activity of CDK9. Our results also demonstrate as a proof-of-principle that selective inhibition of nuclear PP1 is a feasible approach to inhibit HIV-1 viral transcription.