We recently identified the protein phosphatase-1 - targeting compound, 1E7-03 which inhibited HIV-1 in vitro. Here, we investigated the effect of 1E7-03 on HIV-1 infection in vivo by analyzing its metabolic stability and antiviral activity of 1E7-03 and its metabolites in HIV-1 infected NSG-humanized mice. 1E7-03 was degraded in serum and formed two major degradation products, DP1 and DP3, which bound protein phosphatase-1 in vitro. However, their anti-viral activities were significantly reduced due to inefficient cell permeability. In cultured cells, 1E7-03 reduced expression of several protein phosphatase-1 regulatory subunits including Sds22 as determined by a label free quantitative proteomics analysis. In HIV-1-infected humanized mice, 1E7-03 significantly reduced plasma HIV-1 RNA levels, similar to the previously described HIV-1 transcription inhibitor F07#13. We synthesized a DP1 analog, DP1-07 with a truncated side chain, which showed improved cell permeability and longer pharmacokinetic retention in mice. But DP1-07 was less efficient than 1E7-03 as a HIV-1 inhibitor both in vitro and in vivo, indicating that the full side chain of 1E7-03 was essential for its anti-HIV activity. Analysis of 1E7-03 stability in plasma and liver microsomes showed that the compound was stable in human, primate and ferret plasma but not in rodent plasma. However, 1E7-03 was not stable in human liver microsomes. Our findings suggest that 1E7-03 is a good candidate for future development of HIV-1 transcription inhibitors. Further structural modification and advanced formulations are needed to improve its metabolic stability and enhance its antiviral activity in non-human primate animals and humans.