To define the role of the human immunodeficiency virus type 1 (HIV-1) envelope proteins in virus infection, a series of peptides were synthesized based on various regions of the HIV-1 transmembrane protein gp41. One of these peptides, DP-178, corresponding to a region predictive of alpha-helical secondary structure (residues 643-678 of the HIV-1LAI isolate), has been identified as a potent antiviral agent. This peptide consistently blocked 100% of virus-mediated cell-cell fusion at < 5 ng/ml (IC90 approximately 1.5 ng/ml) and gave an approximately 10 times reduction in infectious titer of cell-free virus at approximately 80 ng/ml. The inhibitory activity was observed at peptide concentrations approximately 10(4) to 10(5) times lower than those at which cytotoxicity and cytostasis were detected. Peptide-mediated inhibition is HIV-1 specific in that approximately 10(2) to 10(3) times more peptide was required for inhibition of a human immunodeficiency virus type 2 isolate. Further experiments showed that DP-178 exhibited antiviral activity against both prototypic and primary HIV-1 isolates. As shown by PCR analysis of newly synthesized proviral DNA, DP-178 blocks an early step in the virus life cycle prior to reverse transcription. Finally, we discuss possible mechanisms by which DP-178 may exert its inhibitory activity.