The HIV-1 envelope glycoprotein is composed of a receptor binding subunit, gp120 that is non-covalently linked to the membrane-anchored fusion protein, gp41. Triggered by cellular receptor binding, the trimeric envelope complex mediates the fusion of viral and cellular membranes through the rearrangement of the fusion protein subunit into a six-helical bundle core structure. Here we describe the biophysical and functional properties of a membrane-anchored fragment of gp41 (gp41ctm) that includes the complete C-terminal heptad repeat region 2, the connecting part, and the transmembrane region. We show that the transmembrane domain of the envelope glycoprotein is sufficient for trimerization in vitro, contributing most of the alpha-helical content of gp41ctm. Trimeric gp41ctm is protease-resistant and recognizes neutralizing antibodies 2F5 and 4E10. However, gp41ctm and gp41ctm proteoliposomes elicit no clear neutralizing immune responses in preliminary mouse studies. We further show that gp41ctm and surprisingly also gp41ctm proteoliposomes have potent anti-viral activity. Our data suggest that liposome-anchored gp41ctm exerts its inhibitory action outside of the initial fusion contact site, and its implications for the fusion reaction are discussed.