We investigate the potential connection between incarceration dynamics and AIDS infection rates, with a particular emphasis on the black-white AIDS rate disparity. Using case-level data from the U.S. Centers for Disease Control and Prevention, we construct a panel data set of AIDS infection rates covering the period 1982 to 2001 that vary by year of onset, mode of transmission, state of residence, age, gender, and race/ethnicity. Using data from the U.S. Census, we construct a conforming panel of male and female incarceration rates. We use this panel data to model the dynamic relationship between the male and female AIDS infection rates and the proportion of men in the age/state/race-matched cohort that are incarcerated. We find very strong effects of male incarceration rates on both male and female AIDS infection rates. Our results reveal that the higher incarceration rates among black males over this period explain a substantial share of the racial disparity in AIDS infection between black women and women of other ethnic groups. Relatedly, we estimate a two-stage-least-squares (TSLS) model of AIDS infection rates employing a set of variables describing intra-state changes in sentencing regimes as instruments for variation in incarceration rates. We find TSLS effects of incarceration rates on AIDS infection rates that are significant and comparable in magnitude to the corresponding OLS estimates.