HIV-1 Gag drives a number of events during the genesis of virions and is the only viral protein required for the assembly of virus-like particles in vitro and in cells. Although a reasonable understanding of the processes that accompany the later stages of HIV-1 assembly has accrued, events that occur at the initiation of assembly are less well defined. In this regard, important uncertainties include where in the cell Gag first multimerizes and interacts with the viral RNA, and whether Gag-RNA interaction requires or induces Gag multimerization in a living cell. To address these questions, we developed assays in which protein crosslinking and RNA/protein co-immunoprecipitation were coupled with membrane flotation analyses in transfected or infected cells. We found that interaction between Gag and viral RNA occurred in the cytoplasm and was independent of the ability of Gag to localize to the plasma membrane. However, Gag:RNA binding was stabilized by the C-terminal domain (CTD) of capsid (CA), which participates in Gag-Gag interactions. We also found that Gag was present as monomers and low-order multimers (e.g. dimers) but did not form higher-order multimers in the cytoplasm. Rather, high-order multimers formed only at the plasma membrane and required the presence of a membrane-binding signal, but not a Gag domain (the CA-CTD) that is essential for complete particle assembly. Finally, sequential RNA-immunoprecipitation assays indicated that at least a fraction of Gag molecules can form multimers on viral genomes in the cytoplasm. Taken together, our results suggest that HIV-1 particle assembly is initiated by the interaction between Gag and viral RNA in the cytoplasm and that this initial Gag-RNA encounter involves Gag monomers or low order multimers. These interactions per se do not induce or require high-order Gag multimerization in the cytoplasm. Instead, membrane interactions are necessary for higher order Gag multimerization and subsequent particle assembly in cells.