Viruses have evolved a variety of ways for delivering their genetic cargo to a target cell. One mechanism relies on a short sequence from a protein of the virus that is referred to as a fusion peptide. In some cases, the isolated fusion peptide is also capable of causing membranes to fuse. Infection by HIV-1 involves the 23 amino acid N-terminal sequence of its gp41 envelope protein, which is capable of causing membranes to fuse by itself, but the mechanism by which it does so is not fully understood. Here, a variant of the gp41 fusion peptide that does not strongly promote fusion was studied in the presence of vesicles composed of a mixture of unsaturated lipids and cholesterol by small-angle neutron scattering and circular dichroism spectroscopy to improve the understanding of the mechanism that drives vesicle fusion. The peptide concentration and cholesterol content govern both the peptide conformation and its impact on the bilayer structure. The results indicate that the mechanism that drives vesicle fusion by the peptide is a strong distortion of the bilayer structure by the peptide when it adopts the β-sheet conformation.