The N-terminal fusion peptide (FP) of human immunodeficiency virus-1 (HIV-1) is a potent inhibitor of cell-cell fusion, possibly because of its ability to recognize the corresponding segments inside the fusion complex within the membrane. Here we show that a fusion peptide in which the highly conserved Ile(4), Phe(8), Phe(11), and Ala(14) were replaced by their d-enantiomers (IFFA) is a potent inhibitor of cell-cell fusion. Fourier transform infrared spectroscopy confirmed that despite these drastic modifications, the peptide preserved most of its structure within the membrane. Fluorescence energy transfer studies demonstrated that the diastereomeric peptide interacted with the wild type FP, suggesting this segment as the target site for inhibition of membrane fusion. This is further supported by the similar localization of the wild type and IFFA FPs to microdomains in T cells and the preferred partitioning into ordered regions within sphingomyelin/phosphatidyl-choline/cholesterol giant vesicles. These studies provide insight into the mechanism of molecular recognition within the membrane milieu and may serve in designing novel HIV entry inhibitors.