HIV-I is characterized by its genetic variability. Based on nucleotide sequencernrelatedness. the HIV -I virus variants are grouped into three groups: M (major). 0 (outlier).rnand N (non-M or non-OJ. Group M viruses are further divided into 9 genetic subtypes orrnclades (A-D. F-H. J. & K). The Ethiopian HIV-l/AIDS epidemic is reported to berndominated by HIV-I subtype C. which recently is reported to have a genetic subclusterrndesignated as C'. In an effort to determine the diversity of gp120 V3 sequences and thernfrequency of subtype C and C' viruses among HIV -I isolates from recently infectedrnindividuals. 19 Ethiopian factory workers who seroconverted for HIV -I antibodies duringrnthe year 1997-2000 were included in the study. HIV-I RNA was isolated from plasmarnsamples of study subjects. the RNA was reverse transcribed into cDNA and the enveloperngpl20 V3 region was amplified. Phylogenetic analysis of the env V3 sequences showedrnall the 19 subjects to be infected by subtype C. II out of the 15 sequences were found tornbe subtype C' and 4 SUbtype C. Based on this observation we speculate that subtype C'rnviruses are spreading and might have a selective advantage for transmission. Amino acidrnsequence comparison of the two groups of viruses showed significant amino acid sequencerndifferences. There was a 17% synonymous and 15% non synonymous distance among allrnthe seroconverter sequences and a 24% synonymous and 17% nonsynonymous distancernbetween the C and C' group of sequences. The synonymous distance among subtypernC'(9%) is much less compared to the distance among the SUbtype C sequences (16%).