HIV-1 infection requires the presence of specific chemokine receptors on CD4+ target cells to enable the fusion reactions involved in virus entry. CCR5 is a major fusion coreceptor for macrophage-tropic HIV-1 isolates. HIV-1 entry and fusion are mediated by the viral envelope glycoprotein (Env) and are inhibited by CCR5 ligands, but the mechanisms are unknown. Here, we test the role of G protein signaling and CCR5 surface downmodulation by two separate approaches: direct inactivation of CCR5 signaling by mutagenesis and inactivation of G(i)-type G proteins with pertussis toxin. A CCR5 mutant lacking the last 45 amino acids of the cytoplasmic C-terminus (CCR5306) was created that was expressed on transfected cells at levels comparable to cells expressing CCR5 and displayed normal chemokine binding affinity. CCR5 ligands induced calcium flux and receptor downmodulation in cells expressing CCR5, but not in cells expressing CCR5306. Nevertheless, CCR5 or CCR5306, when coexpressed with CD4, supported comparable HIV-1 Env-mediated cell fusion. Consistent with this, treatment of CCR5-expressing cells with pertussis toxin completely blocked ligand-induced transient calcium flux, but did not affect Env-mediated cell fusion or HIV-1 infection. Also, pertussis toxin did not block chemokine inhibition of Env-mediated cell fusion or HIV-1 infection. However, chemokines inhibited Env-mediated cell fusion less efficiently for CCR5306 than for CCR5. We conclude that the C-terminal domain of CCR5 is critical for G protein signaling and receptor downmodulation from the surface, but that neither function is required for CCR5 fusion coreceptor activity. The contrasting phenotypes of CCR5 and CCR5306 suggest that coreceptor downmodulation and direct blockage of Env interaction sites both contribute to chemokine inhibition of HIV-1 infection.