HIV‐1 infection triggers lateral membrane diffusion following interaction of the viral envelope with cell surface receptors. We show that these membrane changes are necessary for infection, as initial gp120–CD4 engagement leads to redistribution and clustering of membrane microdomains, enabling subsequent interaction of this complex with HIV‐1 co‐receptors. Disruption of cell membrane rafts by cholesterol depletion before viral exposure inhibits entry by both X4 and R5 strains of HIV‐1, although viral replication in infected cells is unaffected by this treatment. This inhibitory effect is fully reversed by cholesterol replenishment of the cell membrane. These results indicate a general mechanism for HIV‐1 envelope glycoprotein‐mediated fusion by reorganization of membrane microdomains in the target cell, and offer new strategies for preventing HIV‐1 infection.