Viral glycoproteins catalyze the fusion between viral and cellular membranes. The fusion protein (F(1)) of Sendai virus has two fusion peptides. One is located at its N-terminus and the other, highly homologous to the HIV-1 and RSV fusion peptides, in the interior of the F(1) protein. A synthetic peptide corresponding to the internal fusogenic domain, namely, SV-201, was found to inhibit virus-cell fusion without interfering with the binding of the virus to the target cells, thus highlighting the importance of this region in Sendai virus-induced membrane fusion. However, its detailed mechanism of inhibition remains unknown. Here, we synthesized a shorter version of SV-201, namely, SV-208, an elongated one, SV-197, and two mutants of SV-201, and compared them functionally and structurally with SV-201. In contrast to SV-201, SV-208 and the two mutants do not inhibit virus-cell fusion. The differences in the oligomerization state of these peptides in aqueous solution and within the membrane, and in their ability to bind to Sendai virions, enabled us to postulate a possible mechanism of viral entry inhibition: SV-201 binds to its target in Sendai virions before the F(1) internal fusion peptide binds to the membrane, therefore blocking the F(1) conformational change required for fusion. In addition, we further characterized the fusogenic activity of the internal fusion peptide, compared to the N-terminal one, and determined its structure in the membrane-bound state by means of fluorescence, CD, and ATR-FTIR spectroscopy. Remarkably, we found that SV-201 and its elongated form, SV-197, are highly potent in inducing fusion of the highly stable large unilamellar vesicles composed of egg phosphatidylcholine, a property found only in an extended version of the HIV-1 fusion peptide. The inhibitory activity of SV-201 and its fusogenic ability are discussed in terms of the "umbrella" model of Sendai virus-induced membrane fusion.