A synthetic peptide, DP178, containing amino acids 127 to 162 of the human immunodeficiency virus type 1 (HIV-1) gp41 Env glycoprotein, is a potent inhibitor of virus infection and virus mediated cell-to-cell fusion (C. Wild, T. Greenwell, and T. Matthews, AIDS Res. Hum. Retroviruses 9:1051-1053, 1993). In an effort to understand the mechanism of action of this peptide, we derived resistant variants of HIV-1(IIIB) and NL4-3 by serial virus passage in the presence of increasing doses of the peptide. Sequence analysis of the resistant isolates suggested that a contiguous 3-amino-acid sequence within the amino-terminal heptad repeat motif of gp41 was associated with resistance. Site-directed mutagenesis studies confirmed this observation and indicated that changes in two of these three residues were necessary for development of the resistant phenotype. Direct binding of DP178 to recombinant protein and synthetic peptide analogs containing the wild-type and mutant heptad repeat sequences revealed a strong correlation between DP178 binding and the biological sensitivity of the corresponding virus isolates to DP178. The results are discussed from the standpoints of the mechanism of action of DP178 and recent crystallographic information for a core structure of the gp41 ectodomain.