The 5' leader of the HIV-1 RNA genome encodes signals that control various steps in the replication cycle, including the dimerization initiation signal (DIS) that triggers RNA dimerization. The DIS folds a hairpin structure with a palindromic sequence in the loop that allows RNA dimerization via intermolecular kissing loop (KL) base pairing. The KL dimer can be stabilized by including the DIS stem nucleotides in the intermolecular base pairing, forming an extended dimer (ED). The role of the ED RNA dimer in HIV-1 replication has hardly been addressed because of technical challenges. We analyzed a set of leader mutants with a stabilized DIS hairpin for in vitro RNA dimerization and virus replication in T cells. In agreement with previous observations, DIS hairpin stability modulated KL and ED dimerization. An unexpected previous finding was that mutation of three nucleotides immediately upstream of the DIS hairpin significantly reduced in vitro ED formation. In this study, we tested such mutants in vivo for the importance of the ED in HIV-1 biology. Mutants with a stabilized DIS hairpin replicated less efficiently than WT HIV-1. This defect was most severe when the upstream sequence motif was altered. Virus evolution experiments with the defective mutants yielded fast replicating HIV-1 variants with second site mutations that (partially) restored the WT hairpin stability. Characterization of the mutant and revertant RNA molecules and the corresponding viruses confirmed the correlation between in vitro ED RNA dimer formation and efficient virus replication, thus indicating that the ED structure is important for HIV-1 replication.