HIV-1 transcription activator protein Tat is phosphorylated in vitro by CDK2 and DNA-PK on Ser-16 residue and by PKR on Tat Ser-46 residue. Here we analyzed Tat phosphorylation in cultured cells and its functionality.Mass spectrometry analysis showed primarily Tat Ser-16 phosphorylation in cultured cells. In vitro, CDK2/cyclin E predominantly phosphorylated Tat Ser-16 and PKR-Tat Ser-46. Alanine mutations of either Ser-16 or Ser-46 decreased overall Tat phosphorylation. Phosphorylation of Tat Ser-16 was reduced in cultured cells treated by a small molecule inhibitor of CDK2 and, to a lesser extent, an inhibitor of DNA-PK. Conditional knock-downs of CDK2 and PKR inhibited and induced one round HIV-1 replication respectively. HIV-1 proviral transcription was inhibited by Tat alanine mutants and partially restored by S16E mutation. Pseudotyped HIV-1 with Tat S16E mutation replicated well, and HIV-1 Tat S46E-poorly, but no live viruses were obtained with Tat S16A or Tat S46A mutations. TAR RNA binding was affected by Tat Ser-16 alanine mutation. Binding to cyclin T1 showed decreased binding of all Ser-16 and Ser-46 Tat mutants with S16D and Tat S46D mutationts showing the strongest effect. Molecular modelling and molecular dynamic analysis revealed significant structural changes in Tat/CDK9/cyclin T1 complex with phosphorylated Ser-16 residue, but not with phosphorylated Ser-46 residue.Phosphorylation of Tat Ser-16 induces HIV-1 transcription, facilitates binding to TAR RNA and rearranges CDK9/cyclin T1/Tat complex. Thus, phosphorylation of Tat Ser-16 regulates HIV-1 transcription and may serve as target for HIV-1 therapeutics.