Although no cases of HIV or AIDS had yet been identified in Papua New Guinea, in November 1986 the Department of Health established a National AIDS Surveillance Committee (NASC) to coordinate information, advise on prevention, and encourage research; later it became responsible for overseeing the activities prescribed in the Short-Term Plan for 1987–88. The first AIDS information pamphlets were prepared and distributed in a low-key exercise which sought to educate without raising fears. Letters appeared in the Papua New Guinea press, especially after the broadcast in Australia in April 1987 of the first major television campaign, The Grim Reaper. Much of the public discussion focused on the potential for AIDS imported by Australians, especially homosexual men, and members of the Surveillance Committee responded with factual information (Turner 1989). The death from AIDS of a PNG national in Australia was announced and a case of HIV in Papua New Guinea, that of an expatriate, was identified in June 1987, while the first clinical case of AIDS in Papua New Guinea was reported in March 1988. AIDS had made, at least in limited fashion, a public appearance.

From the start, a major issue in the Department of Health and in public discussion concerned the relative priority to be given to AIDS as against well-established health problems, notably malaria and tuberculosis. Dr Quentin Reilly, secretary for Health during the early period, was sceptical about the need for diverting resources to AIDS and he reflected the predominant view among doctors and politicians. In 1986 Clement Malau, a young doctor in the Papua New Guinea Defence Force (PNGDF), was assigned to the Department of Health as senior specialist medical officer for communicable diseases with AIDS as one of his responsibilities, working to the assistant secretary for disease control, Dr Timothy Pyakalyia. Over the next fifteen years Malau, Pyakalyia and a venereologist, Dr Tompkins Tabua, provided continuity as central actors in AIDS policy making, though Malau was absent for extended periods for AIDS training and positions overseas. They maintained most of Papua New Guinea's contacts with international AIDS organizations, representing Papua New Guinea at global and regional meetings on AIDS.

Some of the impetus for policy development derived from ministers of Health who took an interest in AIDS. A workshop on AIDS for members of parliament was organized in April 1988, at which a former Australian minister for Health, Dr Peter Baume, was keynote speaker. Following this, Tim Ward, the Papua New Guinea minister, won adoption by the National Executive Council of a National Policy Document on AIDS Control in Papua New Guinea (Department of Health 1988), prepared by the NASC, which was renamed the National AIDS Committee. The Document laid out broad policy directions in line with GPA's guidelines for policy making, ensuring confidentiality and non-discrimination, and it addressed directly the need for the churches to collaborate with departmental messages on condoms. The National Council of Churches had begun discussing AIDS issues, as had their counterparts in Australia during 1987, and the Council was given a seat on an enlarged NASC, along with international organizations and the Department of Anthropology and Sociology at the University of Papua New Guinea. Ward was shortly thereafter replaced as minister by Robert Suckling, owner of several bars in Port Moresby, who promoted a number of initiatives on condom education through mass media. Suckling also set up an ad hoc parliamentary group on AIDS to provide continuing orientation for MPs, but without secretariat support, it proved short lived.

During 1989–90 a National Medium-Term Programme for the Prevention and Control of AIDS in Papua New Guinea 1989–1995 (Department of Health 1990) was drawn up under the auspices of the Disease Control Unit of the Department of Health. The central initiatives of the program fitted with GPA's standard biomedical top-down model for medium-term programs: an epidemiological sentinel survey, expansion of education and condom promotion campaigns, upgrading of STD clinics, and expansion of training in counselling and other skills. Negotiations were undertaken with prospective international donors to fund the program's proposed budget of $US6.321 million, one third of this devoted to STD clinics. However the government was unwilling to give AIDS a high funding priority. Some components of the program were funded, notably through staffing by WHO and the EEC of specialist positions in the AIDS/STD Unit and upgrading of the Goroka STD clinic. USAID initially funded a social marketing program for condoms and several research projects through the Papua New Guinea Institute for Medical Research, but later withdrew from AIDS and other health programs in the Pacific.

In November 1990 a national workshop on AIDS in the workplace was organized to persuade government and private sector employers of the need for educating their workforce; there it was apparent that only the Ok Tedi mining project and the PNGDF had undertaken serious prevention programs. During the early 1990s the international agenda on AIDS began to absorb the lessons of African experience, as the previous decade's development was undermined by the social and economic impact of the epidemic, particularly through the loss of trained manpower and the disruption of communities. The World Bank began to focus on AIDS and the UN Development Program established an HIV and Development Program under the direction of Elizabeth Reid, who had helped shape Australia's national strategy.

The AIDS/STD Unit sought to put this new dimension of AIDS on the Papua New Guinea agenda by organizing in February 1992 its most ambitious conference, a national seminar on the social and economic impact of AIDS, strongly supported by a new minister of Health, Galeva Kwarara. Kwarara had seen an Australian documentary video, Susie's Story, concerning a young wife and mother dying of AIDS after infection by a drug-using partner, and he was shocked by the implications of heterosexual transmission of the virus for a country where multiple sexual partnering was increasingly commonplace. Senior ministers were persuaded to attend the conference dinner and a drama on AIDS in the village, and a number of senior officials from across government departments were introduced to the issues. The conference also launched the PNGDF's new AIDS education program, designed by the director general of PNGDF Health Services and Malau and featuring the PNGDF’s own Gumi brand of condoms.

At this point one hundred cases of HIV infection had been identified in Papua New Guinea, the great majority of them in Port Moresby, where most testing had taken place. Initial sero-surveillance showed very low levels of prevalence among populations at risk, highest among patients at STD clinics. The National AIDS Committee estimated that there were probably between five and ten thousand cases of infection, but the prospective nature of the threat to Papua New Guinea's economy and society was still too remote to win sustained government attention and resources.

Some initiatives were taken outside government. The Seventh Day Adventist Church and the Salvation Army took AIDS seriously on an international level, and both had AIDS education and care programs within Papua New Guinea from the early 1990s. Following the first regional conference on AIDS, held in Canberra in July 1990, Australian and Papua New Guinea NGOs were in occasional contact on AIDS, but the only sustained NGO activity of any kind in Papua New Guinea at this stage was that of environmental and forest groups. However, the Papua New Guinea Institute of Medical Research, based at Goroka, began to take a role in policy development, largely through the activities of a medical anthropologist, Dr Carol Jenkins. Jenkins organized the first major survey of sexuality in Papua New Guinea in 1991, training public servants and teachers as interviewers in their home areas during the Christmas leave period. Funded by USAID, the survey drew on 423 interviews in 40 language groups. When it was published (National Sex and Reproduction Research Team and Jenkins 1994) it was met with denial by some church groups, but it provided invaluable material for culturally sensitive education programs and served as a model for research elsewhere. With funding from a variety of sources, Jenkins also organized research interventions and peer education among provincial communicators, transport workers, sex workers, police, and security staff. She and Michael Alpers, director of the Institute of Medical Research, also organized the first explicitly AIDS-focused NGO, Action for Community Health, which, after long delays, was approved in 1996 before Jenkins left Papua New Guinea for AIDS work in Bangladesh.

Early in 1993 the Department of Health proposed that a National AIDS Council be established as a separate statutory authority with its own staff and power to coordinate a full multisectoral program. A second conference on the social and economic impact of AIDS was organized in July 1993, with a higher level of participation from senior officials, to promote the need for a council and for a national federation of non-government organizations working on AIDS. Jenkins, Malau and Barry Holloway, who directed an office of advanced planning under the Wingti government, attempted to sell the proposal for the council to government, but a cabinet committee chaired by Sir Julius Chan as deputy prime minister refused to grant space in the parliamentary agenda. When Peter Barter was named minister of Health under a new Chan government in 1994, Jenkins persuaded him to resurrect the proposal, but Chan himself rejected it, stating that AIDS needed no priority as against malaria and other diseases. However John Nilkare, as minister for Provincial Affairs, was sufficiently impressed to provide Jenkins with K100,000 for research and education programs.

Despite interest on the part of successive ministers for Health, the period from 1993 was one of reduced funding, reduced staff and no political commitment to AIDS. Jenkins described the situation as of 1995:

The period also saw a sharp increase in the incidence of HIV: 351 new cases of HIV infection were reported in 1997, and 642 in 1998, despite lower levels of surveillance.

During this period of government inactivity, there were shifts in the international context of AIDS policy. The Global Program on AIDS, based in the World Health Organization, was replaced in 1996 by the Joint United Nations Program on AIDS (UNAIDS) after donor governments insisted on a unified UN focus for increasingly disparate activities. UNAIDS country program advisers were appointed to many countries and theme groups were established to coordinate all UN agencies' work on AIDS. Papua New Guinea was not provided with a country program adviser, but a theme group was formed under the leadership of the WHO representative.