Human APOBEC3G (hA3G) has been identified as an anti-HIV-1 host factor. The presence of hA3G in HIV-1 strongly inhibits the ability of the virus to produce new viral DNA upon infection. In this report, we demonstrate that the reduction of late viral DNA synthesis is due to the inhibition by hA3G of the strand transfer steps that occur during reverse transcription. Analysis of viral cDNA intermediates in vivo reveals that hA3G causes an inhibition of the minus and plus strand transfers, without having a significant impact on DNA elongation. Using an in vitro system to measure minus strand transfer similarly shows a dose-dependent reduction of strand transfer by hA3G. This inhibition of strand transfer occurs independently the editing activity of hA3G and is correlated with its ability to prevent RNaseH degradation of the template RNA.