The N-terminal fusion peptide and the interfacial sequence preceding the transmembrane anchor of HIV-1 gp41 are required for viral fusion. Studies with synthetic peptides indicated that these regions function by destabilizing membranes, which is regarded as a crucial step in the membrane fusion reaction. However, it is not clear whether membrane destabilization is induced by these sequences in the intact gp41. We address this question by examining fusion and destabilization of membranes expressing HIV-1(IIIB) wild-type Env and two mutant Envs. (1) A Glu residue at position 2 of the gp41 fusion peptide is substituted for Val (V2E) to produce one mutant. (2) Residues 665-682 in the membrane-proximal domain are deleted to form the other. The process of membrane destabilization was monitored by the influx of Sytox, an impermeant fluorescent dye, into the Env-expressing cells following the interaction with CD4-CXCR4 complexes, and fusion was monitored by observing dye transfer between Env-expressing cells and appropriate target cells. We also monitored the conformational changes in the Envs following their interactions with CD4 and CXCR4 by immunofluorescence using an anti-gp41 mAb that reacts with the six-helix bundle. In contrast to the wild type, both Env mutants did not mediate cell fusion. The V2E Env did not mediate membrane destabilization. However, the Env with an unmodified fusion peptide but with a deletion of residues 665-682 in the membrane-proximal domain did mediate membrane destabilization. The wild type and both mutant Envs undergo conformational changes detected by the anti-gp41 six-helix bundle mAbs. Our results suggest that in intact HIV-1 Env the membrane-proximal domain is not required for membrane perturbations, but rather enables the bending of gp41 that is required for viral and target membranes to come together. Moreover, the observation that the Delta665-683 Env self-inserts its fusion peptide but does not cause fusion suggests that self-insertion of the fusion peptide is not sufficient for HIV-1 Env-mediated fusion.