Human Immunodeficiency Virus-1 (HIV-1) entry is dependent on the envelope glycoprotein (Env) that is present on the virion and facilitates fusion between the envelope and the cellular membrane. The protein consists of two subunits, gp120 and gp41, with the former required for binding the CD4 receptor and either the CXCR4 or CCR5 coreceptor, and the latter for mediating fusion. The requirement of fusion for infection has made Env an attractive target for HIV therapy development and led to the FDA approval of enfuvirtide, a fusion inhibitor. Continued development of entry inhibitors is warranted because enfuvirtide resistant HIV-1 strains have emerged. In this study, a novel HIV-1 fusion assay was validated using neutralizing antibodies and then used to investigate the mechanism of action of eCD4-Igmim2, an HIV-1 inhibitor proposed to cooperatively bind the CD4 binding site and the sulfotyrosine-binding pocket of gp120. Greater reduction in fusion levels was observed with eCD4-Igmim2 in the fusion assay than all of the gp120 antibodies evaluated. Lab adapted isolates, HIV-1HXB2 and HIV-1YU2, were sensitive to eCD4-Igmim2 in the fusion assay, while primary isolates, HIV-1BG505 and HIV-1ZM651 were resistant. These results correlated with greater IC50 values for primary isolates compared to the lab adapted isolates observed in a virus neutralization assay. Analysis of gp120 models identified differences in the V1 and V2 domains that are associated with eCD4-Igmim2 sensitivity. This study highlights the use of a fusion assay to identify key areas for improving the potency of eCD4-Igmim2.