Peptides derived from the heptad repeat 2 (HR2) region of the HIV fusogenic protein gp41 are potent inhibitors of viral infection, and one of them, enfuvirtide, is used for the treatment of therapyexperienced AIDS patients. The mechanism of action of these peptides is binding to a critical intermediate along the virus-cell fusion pathway, and accordingly, increasing the affinity for the intermediate yields more potent inhibitors. We took a different approach, namely to increase the potency of the HR2 peptide inhibitor C34 by targeting it to the cell compartment where fusion occurs, and we show here that a simple, yet powerful way to accomplish this is attachment of a cholesterol group. C34 derivatized with cholesterol (C34-Chol) shows dramatically increased antiviral potency on a panel of primary isolates, with IC 90 values 15-to 300-fold lower than enfuvirtide and the second-generation inhibitor T1249, making C34-Chol the most potent HIV fusion inhibitor to date. Consistent with its anticipated mechanism of action, the antiviral activity of C34-Chol is unusually persistent: washing target cells after incubation with C34-Chol, but before triggering fusion, increases IC 50 only 7-fold, relative to a 400-fold increase observed for C34. Moreover, derivatization with cholesterol extends the half-life of the peptide in vivo. In the mouse, s.c. administration of 3.5 mg/kg C34-Chol yields a plasma concentration 24 h after injection >300-fold higher than the measured IC 90 values. Because the fusion machinery targeted by C34-Chol is similar in several other enveloped viruses, we believe that these findings may be of general utility. antiretroviral drug ͉ enveloped viruses ͉ lipid rafts ͉ peptide therapeutic