Recent studies have suggested that the plasma membrane contains cholesterol-enriched microdomains known as lipid rafts. HIV-1 Gag binds raft-rich regions of the plasma membrane, and cholesterol depletion impairs HIV-1 particle production. In this study, we sought to define the block imposed by cholesterol depletion. We observed that membrane binding and higher-order multimerization of Gag were markedly reduced upon cholesterol depletion. Fusing to Gag a highly efficient, heterologous membrane-binding sequence reversed the defects in Gag-membrane binding and multimerization caused by cholesterol depletion, indicating that the impact of reducing the membrane cholesterol content on Gag-membrane binding and multimerization can be circumvented by increasing the affinity of Gag for membrane. Virus release efficiency of this Gag derivative was minimally affected by cholesterol depletion. Altogether, these results are consistent with the hypothesis that cholesterol-enriched membrane microdomains promote HIV-1 particle production by facilitating both Gag-membrane binding and Gag multimerization.