SARS-CoV-2 Delta variant has rapidly replaced the Alpha variant around the world. The mechanism that drives this global replacement has not been defined. Here we report that Delta spike mutation P681R plays a key role in the Alpha-to-Delta variant replacement. In a replication competition assay, Delta SARS-CoV-2 efficiently outcompeted the Alpha variant in human lung epithelial cells and primary human airway tissues. Delta SARS-CoV-2 bearing the Alpha-spike glycoprotein replicated less efficiently than the wild-type Delta variant, suggesting the importance of Delta spike in enhancing viral replication. The Delta spike has accumulated mutation P681R located at a furin cleavage site that separates the spike 1 (S1) and S2 subunits. Reverting the P681R mutation to wild-type P681 significantly reduced the replication of Delta variant, to a level lower than the Alpha variant. Mechanistically, the Delta P681R mutation enhanced the cleavage of the full-length spike to S1 and S2, leading to increased infection via cell surface entry. In contrast, the Alpha spike also has a mutation at the same amino acid (P681H), but the spike cleavage from purified Alpha virions was reduced compared to the Delta spike. Collectively, our results indicate P681R as a key mutation in enhancing Delta variant replication via increased S1/S2 cleavage. Spike mutations that potentially affect furin cleavage efficiency must be closely monitored for future variant surveillance.