The emergence of resistant HIV strains, together with the severe side-effects of existing drugs and lack of development of effective anti-HIV vaccines highlight the need for novel antivirals, as well as innovative methods to facilitate their discovery. Here, we have developed an assay in T-cells to monitor the proteolytic activity of the HIV-1 protease (PR). The assay is based on the inducible expression of HIV-1 PR fused within the Gal4 DNA-binding and transactivation domains. The fusion protein binds to the Gal4 responsive element and activates the downstream reporter, enhanced green fluorescent protein (eGFP) gene only in the presence of an effective PR Inhibitor (PI). Thus, in this assay, eGFP acts as a biosensor of PR activity, making it ideal for flow cytometry based screening. Furthermore, the assay was developed using retroviral technology in T-cells, thus providing an ideal environment for the screening of potential novel PIs in a cell-type that represents the natural milieu of HIV infection. Clones with the highest sensitivity, and robust, reliable and reproducible reporter activity, were selected. The assay is easily adaptable to other PR variants, a multiplex platform, as well as to high-throughput plate reader based assays and will greatly facilitate the search for novel peptide and chemical compound based PIs in T-cells.