Retroviruses undergo several critical steps to complete a replication cycle. These include the complex processes of virus entry, assembly, and budding that often take place at the plasma membrane of the host cell. Both virus entry and release involve membrane fusion/fission reactions between the viral envelopes and host cell membranes. Accumulating evidence indicates important roles for lipids and lipid microdomains in virus entry and egress. In this review, we outline the current understanding of the role of lipids and membrane microdomains in retroviral replication.