Background It remains unclear whether retroviruses can encode and express an intragenomic microRNA (miRNA). Some have suggested that processing by the Drosha and Dicer enzymes might preclude the viability of a replicating retroviral RNA genome that contains a cis-embedded miRNA. To date, while many studies have shown that lentiviral vectors containing miRNAs can transduce mammalian cells and express the inserted miRNA efficiently, no study has examined the impact on the replication of a lentivirus such as HIV-1 after the deliberate intragenomic insertion of a bona fide miRNA. Results We have constructed several HIV-1 molecular clones, each containing a discrete cellular miRNA positioned in Nef. These retroviral genomes express the inserted miRNA and are generally replication competent in T-cells. The inserted intragenomic miRNA was observed to elicit two different consequences for HIV-1 replication. First, the expression of miRNAs with predicted target sequences in the HIV-1 genome was found to reduce viral replication. Second, in one case, where an inserted miRNA was unusually well-processed by Drosha, this processing event inhibited viral replication. Conclusion This is the first study to examine in detail the replication competence of HIV-1 genomes that express cis-embedded miRNAs. The results indicate that a replication competent retroviral genome is not precluded from encoding and expressing a viral miRNA.