SC29EK is an electronically constrained α-helical peptide HIV-1 fusion inhibitor that is highly effective against both wild-type and enfuvirtide (T20)-resistant viruses. In this study, we focused on investigating the mechanism of HIV-1 resistance to SC29EK by two approaches. First, SC29EK-escaping HIV-1 variants were selected and characterized. Three mutant viruses, which possessed two (N43K/E49A) or three (Q39R/N43K/N126K and N43K/E49A/N126K) amino acid substitutions in the N- and C-terminal repeat regions of gp41 were identified as conferring high resistance to SC29EK and cross-resistance to the first-generation (T20 and C34) and newly designed (sifuvirtide, MT-SC29EK, and 2P23) fusion inhibitors. The resistance mutations could reduce the binding stability of SC29EK, impair viral Env-mediated cell fusion and entry, and change the conformation of the gp41 core structure. Further, we determined the crystal structure of SC29EK in complex with a target mimic peptide, which revealed the critical intra- and interhelical interactions underlying the mode of action of SC29EK and the genetic pathway to HIV-1 resistance. Taken together, the present data provide new insights into the structure and function of gp41 and the structure-activity relationship (SAR) of viral fusion inhibitors. T20 is the only membrane fusion inhibitor available for treatment of viral infection, but it has relatively low anti-HIV activity and genetic barriers for resistance, thus calling for new drugs blocking the viral fusion process. As an electronically constrained α-helical peptide, SC29EK is highly potent against both wild-type and T20-resistant HIV-1 strains. Here, we report the characterization of HIV-1 variants resistant to SC29EK and the crystal structure of SC29EK. The key mutations mediating high resistance to SC29EK and cross-resistance to the first and new generations of fusion inhibitors as well as the underlying mechanisms were identified. The crystal structure of SC29EK bound to a target mimic peptide further revealed its action mode and genetic pathway to inducing resistance. Hence, our data have shed new lights on the mechanisms of HIV-1 fusion and its inhibition.