The 5' untranslated leader region of retroviral RNAs contains noncoding information that is essential for viral replication, including signals for transcriptional transactivation, splicing, primer binding for reverse transcription, dimerization of the genomic RNA, and encapsidation of the viral RNA into virions. These RNA motifs have considerable structural and functional overlap. In this study, we investigate the conformational dynamics associated with the use and silencing of a sequence in HIV-2 RNA that is involved in genomic RNA dimerization called stem-loop 1 (SL1) and its relationship with a flanking sequence that is known to be important for encapsidation of viral RNAs. We demonstrate that a long-distance intramolecular interaction between nucleotides located upstream of the primer-binding site domain and nucleotides encompassing the Gag translation start codon functionally silences SL1 as a dimerization element. This silencing can be relieved by mutation or by hybridization of an oligonucleotide that disrupts the long-distance interaction. Furthermore, we identify a palindrome within the packaging/encapsidation signal Psi (just 5' of SL1) that can either serve as an efficient dimerization signal itself, or can mediate SL1 silencing through base pairing with SL1. These results provide a tangible link between the functions of genomic RNA dimerization and encapsidation, which are known to be related, but whose physical relationship has been unclear. A model is proposed that accounts for observations of dimerization, packaging, and translation of viral RNAs during different phases of the viral replication cycle.