The interaction of the peptide fragment 828-848, called P828, from the carboxy-terminal region of the envelope glycoprotein gp41 of HIV-I with model membranes composed of phosphatidylcholine (PC) and phosphatidylglycerol (PG) was investigated using microelectrophoretic mobility of liposomes, fluorescence polarization of labeled lipids, NMR, and differential scanning calorimetry. The peptide binds to negatively charged lipid surfaces. No interaction between P828 and neutral PC surfaces is observed. The interaction between the peptide and the lipid is exclusively electrostatic with the six positively charged arginines of P828 acting as binding sites for PG. Circular dichroism measurements of P828 indicate that the peptide undergoes a transition from a random coil to an ordered conformation upon binding to negatively charged PG bilayers or SDS micelles, but not in the presence of neutral PC bilayers. The ordered structure has an apparent helical content of 60%. IN DOPG/DOPC mixtures containing 20 mol % DOPG, the peptide causes the formation of lipid domains enriched in DOPG, as assessed by measurement of fluorescence energy transfer between labeled PG and PC. The formation of these domains requires energy and therefore reduces the strength of peptide binding to the lipid matrix. Our data support and quantitate the results from antibody binding studies [Haffar, O.K., Dowbenko, D. J., & Berman, P. W. (1988) J. Cell Biol. 107, 1677-1687] that the carboxy-terminal segment of the envelope glycoprotein gp41 interacts with microsomal membranes.