APOBEC3G is a retroviral restriction factor that can inhibit the replication of human immunodeficiency virus, type 1 (HIV-1) in the absence of the viral infectivity factor (Vif) protein. Virion-encapsidated APOBEC3G can deaminate cytosine to uracil in viral (-)DNA, which leads to hypermutation and inactivation of the provirus. APOBEC3G catalyzes these deaminations processively on single-stranded DNA using sliding and jumping movements. Vif is thought to primarily overcome APOBEC3G through an interaction that mediates APOBEC3G ubiquitination and results in its proteasomal degradation. However, Vif may also inhibit APOBEC3G mRNA translation, virion encapsidation, and deamination activity. Here we investigated the molecular mechanism of VifIIIB- and VifHXB2-mediated inhibition of APOBEC3G deamination activity. Biochemical assays using a model HIV-1 replication assay and synthetic single-stranded or partially double-stranded DNA substrates demonstrated that APOBEC3G has an altered processive mechanism in the presence of Vif. Specifically, VifHXB2 inhibited the jumping and VifIIIB inhibited the sliding movements of APOBEC3G. The absence of such an effect by Vif on degradation-resistant APOBEC3G D128K indicates that a Vif-APOBEC3G interaction mediates this effect. That the partially processive APOBEC3G was less effective at inducing mutagenesis in a model HIV-1 replication assay suggests that Vif co-encapsidation with APOBEC3G can promote sublethal mutagenesis of HIV-1 proviral DNA.