In previous studies, we demonstrated that single-chain variable fragments (scFvs) from anti-human immunodeficiency virus (HIV) Env monoclonal antibodies act as entry inhibitors when tethered to the surface of target cells by a glycosyl-phosphatidylinositol (GPI) anchor. Interestingly, even if a virus escapes inhibition at entry, its replication is ultimately controlled. We hypothesized that in addition to functioning as entry inhibitors, anti-HIV GPI-scFvs may also interact with Env in an infected cell, thereby interfering with the infectivity of newly produced virions. Here, we show that expression of the anti-HIV Env GPI-scFvs in virus-producing cells reduced the release of HIV from cells 5- to 22-fold, and infectivity of the virions that were released was inhibited by 74% to 99%. Additionally, anti-HIV Env GPI-scFv X5 inhibited virion production and infectivity after latency reactivation and blocked transmitter/founder virus production and infectivity in primary CD4 T cells. In contrast, simian immunodeficiency virus (SIV) production and infectivity were not affected by the anti-HIV Env GPI-scFvs. Loss of infectivity of HIV was associated with a reduction in the amount of virion-associated Env gp120. Interestingly, an analysis of Env expression in cell lysates demonstrated that the anti-Env GPI-scFvs interfered with processing of Env gp160 precursors in cells. These data indicate that GPI-scFvs can inhibit Env processing and function, thereby restricting production and infectivity of newly synthesized HIV. Anti-Env GPI-scFvs therefore appear to be unique anti-HIV molecules as they derive their potent inhibitory activity by interfering with both early (receptor binding/entry) and late (Env processing and incorporation into virions) stages of the HIV life cycle. The restoration of immune function and persistence of CD4 T cells in HIV-1-infected individuals without antiretroviral therapy requires a way to increase resistance of CD4 T cells to infection by both R5- and X4-tropic HIV-1. Previously, we reported that anchoring anti-HIV-1 single-chain variable fragments (scFvs) via glycosyl-phosphatidylinositol (GPI) to the surface of permissive cells conferred a high level of resistance to HIV-1 variants at the level of entry. Here, we report that anti-HIV GPI-scFvs also derive their potent antiviral activity in part by blocking HIV production and Env processing, which consequently inhibits viral infectivity even in primary infection models. Thus, we conclude that GPI-anchored anti-HIV scFvs derive their potent blocking activity of HIV replication by interfering with successive stages of the viral life cycle. They may be effectively used in genetic intervention of HIV-1 infection.