Entry of HIV-1 into the target cell is mediated by the envelope glycoprotein consisting of noncovalently associated surface subunit gp120 and transmembrane subunit gp41. To form a functional gp41 complex, the protein undergoes hairpin formation and self-assembly. The fusion event can be inhibited by gp41-derived peptides at nanomolar concentration and is highly dependent on the time of addition, implying a role of folding kinetics on the inhibitory action. Oligomerization of the gp41 ectodomain was demonstrated by light scattering measurements. Kinetic study by stopped-flow fluorescence and absorption measurements (i) revealed a multistate folding pathway and stable intermediates; (ii) showed a dissection of fast and slow components for early and late stages of folding, respectively, with 3 orders of magnitude difference in the time scale; (iii) showed the slow process was attributed to misfolding and unzipping of the hairpin; and (iv) showed retardation of the native hairpin formation is assumed to lead to coupling of the correctly registered hairpin and self-assembly. This coupling allows the deduction on the time scale of intrachain folding (0.11 s) for the protein. The folding reaction was illustrated by a free energy profile to explain the temporal dichotomy of fast and slow steps of folding as well as effective inhibition by gp41-derived peptide.