Processing of the GagPol polyprotein precursor of human immunodeficiency virus type 1 (HIV-1) is a critical step in viral assembly and replication. The HIV-1 protease (PR) is translated as part of GagPol and is both necessary and sufficient for precursor processing. The PR is active only as a dimer; enzyme activation is initiated when the PR domains in two GagPol precursors dimerize. The precise mechanism by which the PR becomes activated and the subsequent initial steps in precursor processing are not well understood. However, it is clear that processing is initiated by the PR domain that is embedded within the precursor itself. We have examined the earliest events in precursor processing using an in vitro assay in which full-length GagPol is cleaved by its embedded PR. We demonstrate that the embedded, immature PR is as much as 10,000-fold less sensitive to inhibition by an active-site PR inhibitor than is the mature, free enzyme. Further, we find that different concentrations of the active-site inhibitor are required to inhibit the processing of different cleavage sites within GagPol. Finally, our results indicate that the first cleavages carried out by the activated PR within GagPol are intramolecular. Overall, our data support a model of virus assembly in which the first cleavages occur in GagPol upstream of the PR. These intramolecular cleavages produce an extended form of PR that completes the final processing steps accompanying the final stages of particle assembly by an intermolecular mechanism.