HIV-1 assembly and release occur at the plasma membrane in T lymphocytes, while intracellular sites of virus assembly or accumulation are apparent in macrophages. The host protein tetherin (BST-2) inhibits HIV release from the plasma membrane by retaining viral particles at the cell surface, but the role of tetherin at intracellular HIV assembly sites is unclear. We determined that tetherin is significantly upregulated upon macrophage infection and localizes to an intracellular virus-containing compartment (VCC). Tetherin localized at the virus-VCC membrane interface, suggesting that tetherin physically tethers virions in VCCs. Tetherin knockdown diminished and redistributed VCCs within macrophages and promoted HIV release and cell-cell transmission. The HIV Vpu protein, which downregulates tetherin from the plasma membrane, did not fully overcome tetherin-mediated restriction of particle release in macrophages. Thus, tetherin is essential for VCC formation and may account for morphologic differences in the apparent HIV assembly sites in macrophages versus T cells.