A synthetic peptidemimetic substrate of the human immunodeficiency virus 1 (HIV-1) protease with a nonhydrolyzable pseudodipeptidyl insert at the protease cleavage site was prepared. The peptide U-81749 inhibited recombinant HIV-1 protease in vitro (inhibition constant K_i of 70 nanomolar) and HIV-1 replication in human peripheral blood lymphocytes (inhibitory concentration IC₅₀ of 0.1 to 1 micromolar). Moreover, 10 micromolar concentrations of U-81749 significantly inhibited proteolysis of the HIV-1 gag polyprotein (p55) to the mature viral structural proteins p24 and p17 in cells infected with a recombinant vaccinia virus expressing the HIV-1 gag-pol genes. The HIV-1 like particles released from inhibitor-treated cells contained almost exclusively p55 and other gag precursors, but not p24. Incubation of HIV-like particles recovered from drug-treated cultures in drug-free medium indicated that inhibition of p55 proteolysis was at least partially reversible, suggesting that U-81749 was present within the particles.