In retroviruses, the genomic RNA is in the form of a 60S-70S complex composed of two identical genome-length RNA molecules tightly associated through numerous interactions. A major interaction, called the dimer linkage structure, has been found near the RNA 5' end and is probably involved in the control of translation, packaging, and recombination during proviral DNA synthesis. Recently, a small sequence corresponding to a stem-loop structure located in the 5' leader of human immunodeficiency virus type 1 (HIV-1) RNA was found to be required for the initiation of HIV-1 RNA dimerization in vitro and named the dimerization initiation site (E. Skripkin, J.-C. Paillart, R. Marquet, B. Ehresmann, and C. Ehresmann, Proc. Natl. Acad. Sci. USA 91: 4945-4949, 1994). To investigate the possible role of this 5' stem-loop in HIV-1 virion formation and infectivity, four mutant viruses were generated and analyzed in vivo. Results show that deletion of the stem-loop structure reduces infectivity by a factor of 10(3) whereas loop substitutions cause a decrease of 10- to 100-fold. The level of genomic RNA packaging was found to be decreased fivefold in mutants virions containing the stem-loop deletion and only twofold in the loop-substituted virions. Surprisingly, the second DNA strand transfer during reverse transcription was found to be severely impaired upon stem-loop deletion. Taken together, these results indicate that the stem-loop structure called the dimerization initiation site is a cis element acting on both genomic RNA packaging and synthesis of proviral DNA.