The Vif protein of human immunodeficiency virus type 1 (HIV-1) is essential for viral evasion of the host antiviral protein APOBEC3G, also known as CEM15. Vif mutant but not wild-type HIV-1 viruses produced in the presence of APOBEC3G have been shown to undergo hypermutations in newly synthesized viral DNA upon infection of target cells, presumably resulting from C-to-U modification during minus-strand viral DNA synthesis. We now report that HIV-1 Vif could induce rapid degradation of human APOBEC3G that was blocked by the proteasome inhibitor MG132. The efficiency of Vif-induced downregulation of APOBEC3G expression depended on the level of Vif expression. A single amino acid substitution in the conserved SLQXLA motif reduced Vif function. Vif proteins from distantly related primate lentiviruses such as SIVagm were unable to suppress the antiviral activity of human APOBEC3G or the packaging of APOBEC3G into HIV-1 Vif mutant virions, due to a lack of interaction with human APOBEC3G. In the presence of the proteasome inhibitor MG132, virion-associated Vif increased dramatically. However, increased virion packaging of Vif did not prevent virion packaging of APOBEC3G when proteasome function was impaired, and the infectivity of these virions was significantly reduced. These results suggest that Vif function is required during virus assembly to remove APOBEC3G from packaging into released virions. Once packaged, virion-associated Vif could not efficiently block the antiviral activity of APOBEC3G.