Human immunodeficiency virus (HIV) infects cells after binding of the viral envelope glycoprotein gp120 to the cell surface recognition marker CD4. gp120 is noncovalently associated with the HIV transmembrane envelope glycoprotein gp41, and this complex is believed responsible for the initial stages of HIV infection and cytopathic events in infected cells. Soluble constructs of CD4 that contain the gp120 binding site inhibit HIV infection in vitro. This is believed to occur by competitive inhibition of viral binding to cellular CD4. Here we suggest an alternative mechanism of viral inhibition by soluble CD4 proteins. We demonstrate biochemically and morphologically that following binding, the soluble CD4 proteins sT4, V1V2,DT, and V1[106] (amino acids 1-369, 1-183, and -2 to 106 of mature CD4) induced the release of gp120 from HIV-1 and HIV-1-infected cells. gp120 release was concentration-, time-, and temperature-dependent. The reaction was biphasic at 37 degrees C and did not take place at 4 degrees C, indicating that binding of soluble CD4 was not sufficient to release gp120. The appearance of free gp120 in the medium after incubation with sT4 correlated with a decrease in envelope glycoprotein spikes on virions and exposure of a previously cryptic epitope near the amino terminus of gp41 on virions and infected cells. The concentration of soluble CD4 proteins needed to induce the release of gp120 from virally infected cells also correlated with those required to inhibit HIV-mediated syncytium formation. These results suggest that soluble CD4 constructs may inactivate HIV by inducing the release of gp120. We propose that HIV envelope-mediated fusion is initiated following rearrangement and/or dissociation of gp120 from the gp120-gp41 complex upon binding to cellular CD4, thus exposing the fusion domain of gp41.