Human immunodeficiency virus type-1 (HIV) infection of the central nervous system promotes neuronal injury and apoptosis that culminate in HIV-associated neurocognitive disorders (HAND). Viral proteins, such as transactivator of transcription (Tat), have emerged as leading candidates to explain HIV-mediated neurotoxicity, though the mechanism remains unclear. To determine the effects of Tat, rat cortical neurons were exposed to nanomolar concentrations of Tat for various time points. Within a few hours, Tat induced the production of reactive oxygen species (ROS), and other indices of mitochondrial destabilization. In addition, we observed a significant induction of DNA double-strand breaks (DSBs) by Tat. We next investigated the neuroprotective activity of the pituitary adenylate cyclase-activating polypeptide 27 (PACAP27) against these cardinal features of Tat-induced neurodegeneration. PACAP27 (100 nM) inhibited all Tat-mediated toxic effects including DNA DSBs. Importantly, PACAP27 prevented the induction of neuronal loss induced by Tat. The neuroprotective effect of PACAP27 is correlated with its ability to release the anti-apoptotic chemokine CCL5. Our data support a mechanism of Tat neurotoxicity in which Tat induces mitochondrial destabilization, thus increasing the release of ROS, which causes DNA DSBs leading to cell death. PACAP27, through CCL5, mitigates the effects of Tat-induced neuronal dysfunction, suggesting that PACAP27 could be a new strategy for an adjunct therapy against HIV-associated neurocognitive disorders.