Sargassum fusiforme (Harvey) Setchell has been shown to be a highly effective inhibitor of HIV-1 infection. To identify its mechanism of action, we performed bioactivity-guided fractionation on Sargassum fusiforme mixture. Here, we report isolation of a bioactive fraction SP4-2 (S. fusiforme), which at 8 mug/ml inhibited HIV-1 infection by 86.9%, with IC50 value of 3.7 mug. That represents 230-fold enhancement of antiretroviral potency as compared to the whole extract. Inhibition was mediated against both CXCR4 (X4) and CCR5 (R5) tropic HIV-1. Specifically, 10 mug/ml SP4-2 blocked HIV-1 fusion and entry by 53%. This effect was reversed by interaction of SP4-2 with sCD4, suggesting that S. fusiforme inhibits HIV-1 infection by blocking CD4 receptor, which also explained observed inhibition of both X4 and R5-tropic HIV-1. SP4-2 also inhibited HIV-1 replication after virus entry, by directly inhibiting HIV-1 reverse transcriptase (RT) in a dose dependent manner by up to 79%. We conclude that the SP4-2 fraction contains at least two distinct and biologically active molecules, one that inhibits HIV-1 fusion by interacting with CD4 receptor, and another that directly inhibits HIV-1 RT. We propose that S. fusiforme is a lead candidate for anti-HIV-1 drug development.