N-(4-tert-Butylbenzoyl)-2-hydroxynaphthaldehyde hydrazone (BBNH) is a potent inhibitor of the ribonuclease H (RNase H) activity of human immunodeficiency virus (HIV)-1 reverse transcriptase (RT). Molecular modeling predicted that BBNH binds to the HIV-1 RT RNase H active site via two major interactions, coordination to the metal ion cofactor (Mg(2+) or Mn(2+)) in the enzyme active site and aromatic ring-stacking interaction between the naphthyl ring of BBNH and amino acid Tyr-501. The latter residue equivalent is conserved in virtually all RNases H, suggesting the need for an aromatic or pi-stacking interaction in this region. To assess the importance of Tyr-501 in the binding of BBNH for the inhibition of RT RNase H activity, we used site-specific mutagenesis to generate RT with a variety of substitutions at this position. Most substitutions resulted virtually in a complete loss of RNase H activity. However, three mutants, Y501F, Y501W, and Y501R, possessed RNase H activities comparable with wild-type enzyme. Whereas BBNH inhibited Y501F RT RNase H activity with potency equivalent to wild-type RT, the Y501W mutant showed a 6-fold resistance to inhibition by BBNH, and the Y501R mutant was completely resistant to inhibition by BBNH. The replication "fitness" of HIV molecular clones with the Y501W or Y510R mutation was significantly compromised compared with wild-type virus. Importantly, BBNH was an effective inhibitor of the DNA polymerase activity of all Y501X mutants tested. Our results highlight the importance of Tyr-501 in RT RNase H activity and in N-acylhydrazone inhibitor binding and suggest that drugs that target critical residues in HIV-1 proteins may be a useful approach in new antiviral development.