The unfolding equilibrium of the C-terminal domain of human immunodeficiency virus-1 (HIV-1) capsid protein has been analyzed by circular dichroism and fluorescence spectroscopy. The results for the dimeric, natural domain are consistent with a three-state model (N(2)<-->2I<-->2U). The dimer (N(2)) dissociates and partially unfolds in a coupled cooperative process, into a monomeric intermediate (I) of very low conformational stability. This intermediate, which is the only significantly populated form at low (1 microM) protein concentrations, fully preserves the secondary structure but has lost part of the tertiary (intramonomer) interactions found in the dimer. In a second transition, the intermediate cooperatively unfolds into denatured monomer (U). The latter process is the equivalent of a two-state unfolding transition observed for a monomeric domain in which Trp184 at the dimer interface had been truncated to Ala. A highly conserved, disulfide-bonded cysteine, but not the disulfide bond itself, and three conserved residues within the major homology region of the retroviral capsid are important for the conformational stability of the monomer. All these residues are involved also in the association process, despite being located far away from the dimerization interface. It is proposed that dimerization of the C-terminal domain of the HIV-1 capsid protein involves induced-fit recognition, and the conformational reorganization also improves substantially the low intrinsic stability of each monomeric half.