Members of the APOBEC3 family of deoxycytidine deaminases counteract a broad range of retroviruses in vitro through an indirect mechanism that requires virion incorporation and inhibition of reverse transcription and/or hypermutation of minus strand transcripts in the next target cell. The selective advantage to the host of this indirect restriction mechanism remains unclear, but valuable insights may be gained by studying APOBEC3 function in vivo. Apobec3 was previously shown to encode Rfv3, a classical resistance gene that controls the recovery of mice from pathogenic Friend retrovirus (FV) infection by promoting a more potent neutralizing antibody (NAb) response. The underlying mechanism does not involve a direct effect of Apobec3 on B cell function. Here we show that while Apobec3 decreased titers of infectious virus during acute FV infection, plasma viral RNA loads were maintained, indicating substantial release of noninfectious particles in vivo. The lack of plasma virion infectivity was associated with a significant post-entry block during early reverse transcription rather than G-to-A hypermutation. The Apobec3-dependent NAb response correlated with IgG binding titers against native, but not detergent-lysed virions. These findings indicate that innate Apobec3 restriction promotes NAb responses by maintaining high concentrations of virions with native B cell epitopes, but in the context of low virion infectivity. Finally, Apobec3 restriction was found to be saturable in vivo, since increasing FV inoculum doses resulted in decreased Apobec3 inhibition. By analogy, maximizing the release of noninfectious particles by modulating APOBEC3 expression may improve humoral immunity against pathogenic human retroviral infections.