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Selection of a minor viral genotype during perinatal transmission of human Immunodeficiency virus type 1 (HIV-1) has been observed, but there is a lack of information on the correlation of the restrictive transmission with biological properties of the virus, such as replicative fitness. Recombinant viruses expressing the enhanced green fluorescent protein or the Discosoma sp. red fluorescent (DsRed2) protein carrying the V1 to V5 regions of env from seven mother-infant pairs (MIPs) infected by subtype C HIV-1 were constructed, and competition assays were carried out to compare the fitness between the transmitted and nontransmitted viruses. Flow cytometry was used to quantify the frequency of infected cells, and the replicative fitness was determined based on a calculation that takes into account replication of competing viruses in a single infection versus dual infections. Transmitted viruses from five MIPs with the mothers chronically infected showed a restrictive env genotype, and all the recombinant viruses carrying the infants’ Env had higher replicative fitness than those carrying the Env from the mothers. This growth fitness is lineage specific and can be observed only within the same MIP. In contrast, in two MIPs where the mothers had undergone recent acute infection, the viral Env sequences were similar between the mothers and infants and showed no further restriction in quasispecies during perinatal transmission. The recombinant viruses carrying the Env from the infants’ viruses also showed replication fitness similar to those carrying the mothers’ Env proteins. Our results suggest that newly transmitted viruses from chronically infected mothers have been selected to have higher replicative fitness to favor transmission, and this advantage is conferred by the V1 to V5 region of Env of the transmitted viruses. This finding has important implications for vaccine design or development of strategies to prevent HIV-1 transmission.