Peptide fragments of the CD4 molecule were compared in their ability to 1) inhibit CD4-dependent HIV-induced cell fusion; 2) inhibit CD4-dependent HIV infection in vitro; and 3) block gp120 envelope glycoprotein binding to CD4. Peptides from the region CD4(81-92), although inactive when underivatized, were equipotent inhibitors of CD4-dependent virus infection, cell fusion, and CD4/gp120 binding when derivatized via benzylation and acetylation. Peptides of identical chemical composition, but altered sequence and derivatization pattern that blocked gp120 binding to either CD4-positive cells or solubilized CD4, also blocked infection and fusion with similar potencies. Those that did not block gp120/CD4 interaction were also inactive in HIV-1 infection and cell fusion assays. No other peptide fragments of the CD4 molecule inhibited fusion, infection, or CD4/gp120 interaction. The peptide CD4(23-56), derived from a region of CD4 implicated in binding of CD4 antibodies that neutralize HIV infection and cell fusion, had no effect on CD4-dependent cell fusion, HIV-1 infection, or CD4/gp120 binding, but did reverse OKT4A and anti-Leu 3a blockade of gp120 binding to CD4. These data provide evidence that the 81-92 region of CD4 is directly involved in gp120 binding leading to CD4-dependent HIV infection and syncytium formation. Previous observations with structural mutants of CD4 suggest that the CDR2-homologous region of CD4 is also involved, either directly or indirectly, in binding of gp120 to CD4. The CDR2- and CDR3-like domains of CD4 may both contribute to the binding of the HIV envelope necessary for HIV-1 infection and HIV-1-induced cell fusion.