Human immunodeficiency virus type 2 (HIV-2) is more closely related to certain simian immunodeficiency viruses than to HIV-1. The HIV-1 and HIV-2 envelope (env) glycoproteins share only approximately 40% amino acid (aa) sequence homology. Additionally, HIV-1 and HIV-2 seem to differ in pathogenicity and in host range. In order to identify the functional domains of the HIV-2 env glycoprotein, e.g., the CD4 binding region, the membrane anchor, and the fusion site, and to compare them to equivalent sites of HIV-1, a set of recombinant vaccinia viruses (VV) was constructed expressing N-terminal overlapping env proteins of 863 (full-length gp160), 708, 534 (full-length gp120), 438, 332, 198, and 488 aa (internal deletion of aa 333-707). Upon infection, only env proteins comprising the amino-terminal half of the transmembrane protein were expressed on the cell surface. Such VV constructs also induced syncytia in CD4-positive cells. The syncytia were smaller when the cytoplasmic domain of the transmembrane protein was removed. The CD4 binding site of HIV-2 was located between the carboxy terminus of gp120 (aa 512) and aa 438. Thus the amino-terminal half of the transmembrane protein of HIV-2 is sufficient for cell surface localization of the env protein and syncytia induction. These properties are shared with the HIV-1 env protein and demonstrate a functional conservation among HIV-1 and HIV-2 despite their genetic and phenotypic heterogeneity.