The interferon-induced transmembrane (IFITM) proteins have been recently shown to restrict HIV-1 and other viruses. Here, we provide evidence that IFITM proteins, particularly IFITM2 and IFITM3, specifically antagonize the HIV-1 envelope glycoprotein (Env), thereby inhibiting viral infection. IFITM proteins interact with HIV-1 Env in viral producer cells, leading to impaired Env processing and virion incorporation. Notably, the level of IFITM incorporation into HIV-1 virions does not strictly correlate with the extent of inhibition. Prolonged passage of HIV-1 in IFITM-expressing T lymphocytes leads to emergence of Env mutants that overcome IFITM restriction. The ability of IFITMs to inhibit cell-to-cell infection can be extended to HIV-1 pr...