Cholesterol-labeled oligonucleotides were found several years ago to inhibit HIV-1 in tissue culture at nanomolar concentrations. We present evidence that this is mainly due to an electrostatic interaction between polyanionic oligonucleotide concentrated at the cell surface and a positively charged region in the V3 loop of the HIV-1 envelope protein. When added to tissue culture, cholesterol-labeled oligonucleotides became concentrated at the plasma membrane and potently inhibited virus entry and cell fusion mediated by the envelope protein of some X4 strains of HIV-1, but had little effect on fusion mediated by R5 strains of HIV-1, amphotropic MLV envelope protein, or VSV-G protein. Noncholesterol-labeled oligonucleotides did not bind to the cell surface or inhibit fusion. The pattern of susceptibility to cholesterol-labeled oligonucleotides among HIV-1 strains was the same as reported for nonmembrane-associating polyanions such as dextran sulfate, but the cholesterol-labeled oligonucleotides were effective at lower concentrations. Substitution of a basic 33 amino acid V3 loop sequence from the envelope protein of a resistant strain into a susceptible strain made the envelope protein resistant to inhibition. Inhibition by cholesterol-labeled oligonucleotides was abrogated by the polycation DEAE-dextran. Cholesterol-labeled oligonucleotides bound to nonraft regions of the plasma membrane and did not inhibit HIV virus binding to cells. Many infectious agents first associate with target cells via relatively nonspecific charge interactions; our data suggest that molecules that combine a membrane-targeting motif with multiple negative charges might be useful to modify these interactions.