As an obligatory pathogen, influenza virus co-opts host cell machinery to harbor infection and to produce progeny viruses. In order to characterize the virus-host cell interactions, several genome-wide siRNA screens and proteomic analyses have been performed recently to identify host factors involved in influenza virus infection. CD81 has emerged as one of the top candidates in two siRNA screens and one proteomic study. The exact role played by CD81 in influenza infection, however, has not been elucidated thus far. In this work, we examined the effect of CD81 depletion on the major steps of the influenza infection. We found that CD81 primarily affected virus infection at two stages: viral uncoating during entry and virus budding. CD81 marked a specific endosomal population and about half of the fused influenza virus particles underwent fusion within the CD81-positive endosomes. Depletion of CD81 resulted in a substantial defect in viral fusion and infection. During virus assembly, CD81 was recruited to virus budding site on the plasma membrane, and in particular, to specific sub-viral locations. For spherical and slightly elongated influenza virus, CD81 was localized at both the growing tip and the budding neck of the progeny viruses. CD81 knockdown led to a budding defect and resulted in elongated budding virions with a higher propensity to remain attached to the plasma membrane. Progeny virus production was markedly reduced in CD81-knockdown cells even when the uncoating defect was compensated. In filamentous virus, CD81 was distributed at multiple sites along the viral filament. Taken together, these results demonstrate important roles of CD81 in both entry and budding stages of the influenza infection cycle.