HIV-1 gp120 undergoes multiple conformational changes both before and after binding to the host CD4 receptor. BMS-626529 is an attachment inhibitor (AI) in clinical development (administered as prodrug BMS-663068) that binds to HIV-1 gp120. To investigate the mechanism of action of this new class of antiretroviral compounds, we constructed homology models of unliganded HIV-1 gp120 (UNLIG), a pre-CD4 binding-intermediate conformation (pCD4), a CD4 bound-intermediate conformation (bCD4), and a CD4/co-receptor-bound gp120 (LIG) from a series of partial structures. We also describe a simple pathway illustrating the transition between these four states. Guided by the positions of BMS-626529 resistance substitutions and structure–activity relationship data for the AI series, putative binding sites for BMS-626529 were identified, supported by biochemical and biophysical data. BMS-626529 was docked into the UNLIG model and molecular dynamics simulations were used to demonstrate the thermodynamic stability of the different gp120 UNLIG/BMS-626529 models. We propose that BMS-626529 binds to the UNLIG conformation of gp120 within the structurally conserved outer domain, under the antiparallel β20–β21 sheet, and adjacent to the CD4 binding loop. Through this binding mode, BMS-626529 can inhibit both CD4-induced and CD4-independent formation of the “open state” four-stranded gp120 bridging sheet, and the subsequent formation and exposure of the chemokine co-receptor binding site. This unique mechanism of action prevents the initial interaction of HIV-1 with the host CD4+ T cell, and subsequent HIV-1 binding and entry. Our findings clarify the novel mechanism of BMS-626529, supporting its ongoing clinical development. Proteins 2015; 83:331–350. © 2014 Wiley Periodicals, Inc.