A recombinant vaccinia virus was used to express a mutation in the human immunodeficiency virus type 1 (HIV-1) envelope glycoprotein gp120-gp41. In this mutant protein, the second amino acid in the N-terminal region of gp41 has been converted from a hydrophobic valine residue to the polar glutamate. When recombinant vaccinia viruses encoding wild-type HIV-1 envelope glycoprotein infect a lymphocyte cell line lacking CD4, the cells express the HIV-1 envelope glycoprotein gp120-gp41 and are able to fuse with a CD4(4) T lymphocyte cell line. Cells expressing the mutant envelope glycoprotein are unable to fuse with CD4(4) T lymphocytes. When both viruses infect CD4- cells simultaneously, there is an inhibition of fusion to CD4+ cells with an increasing fraction of the virus encoding the mutated envelope glycoprotein. Interestingly, when the opposing, or CD4+ target cells are infected with the mutation-expressing virus, while CD4- cells are infected with wild-type envelope-expressing virus, a similar inhibition of fusion is observed. This suggests that the mutated envelope glycoprotein does not need to reside in the same membrane as the wild-type protein it inhibits.