The human immunodeficiency virus type 1 (HIV-1) envelope glycoprotein (Env) encodes specific trafficking signals within its long cytoplasmic tail (CT) that regulate incorporation into HIV-1 particles. Rab11-family interacting protein 1C (FIP1C) and Rab14 are host trafficking factors required for Env particle incorporation, suggesting that Env undergoes sorting from the endosomal recycling compartment (ERC) to the site of particle assembly on the plasma membrane. We disrupted outward sorting from the ERC by expressing a C-terminal fragment of FIP1C (FIP1C560-649) and examined the consequences on Env trafficking and incorporation into particles. FIP1C560-649 reduced cell surface levels of Env and prevented its incorporation into HIV-1 particles. Remarkably, Env was trapped in an exaggerated perinuclear ERC in a CT-dependent manner. Mutation of either the Yxxϕ endocytic motif or the YW795 motif in the CT prevented Env trapping in the ERC and restored incorporation into particles. In contrast, simian immunodeficiency virus SIVmac239 Env was not retained in the ERC, while substitution of the HIV-1 CT for the SIV CT resulted in SIV Env retention in this compartment. These results provide the first direct evidence that Env traffics through the ERC and support a model whereby HIV-1 Env is specifically targeted to the ERC prior to FIP1C- and CT-dependent outward sorting to the particle assembly site on the plasma membrane.IMPORTANCE The HIV envelope protein is an essential component of the viral particle. While many aspects of envelope protein structure and function have been established, the pathway it follows in the cell prior to reaching the site of particle assembly is not well understood. The envelope protein has a very long cytoplasmic tail that interacts with the host cell trafficking machinery. Here, we utilized a truncated form of the trafficking adaptor FIP1C protein to arrest the intracellular transport of the envelope protein, demonstrating that it becomes trapped inside the cell within the endosomal recycling compartment. Intracellular trapping resulted in a loss of envelope protein on released particles and a corresponding loss of infectivity. Mutations of specific trafficking motifs in the envelope protein tail prevented its trapping in the recycling compartment. These results establish that trafficking to the endosomal recycling compartment is an essential step in HIV envelope protein particle incorporation.