Retrovirus entry into cells is mediated by the viral envelope glycoproteins which, through a cascade of conformational changes, orchestrate fusion of the viral and cellular membranes. In the absence of membrane fusion, viral entry into the host cell cannot occur. For human T-cell leukemia virus type 1 (HTLV-1), synthetic peptides that mimic a carboxy-terminal region of the transmembrane glycoprotein (TM) ectodomain are potent inhibitors of membrane fusion and virus entry. Here, we demonstrate that this class of inhibitor targets a fusion-active structure of HTLV-1 envelope. In particular, the peptides bind specifically to a core coiled-coil domain of envelope, and peptide variants that fail to bind the coiled-coil lack inhibitory activity. Our data indicate that the inhibitory peptides likely function by disrupting the formation of a trimer-of-hairpins structure that is required for membrane fusion. Importantly, we also show that peptides exhibiting dramatically increased potency can be readily obtained. We suggest that peptides or peptide mimetics targeting the fusion-active structures of envelope may be of therapeutic value in the treatment of HTLV-1 infections.