Several members of the human APOBEC3 family of cytidine deaminases can potently restrict retroviruses such as HIV-1. The single-domain APOBEC3H (A3H) is encoded by four haplotypes, of which only A3H haplotype II-RDD (hapII-RDD) restricts HIV-1 efficiently. The goal of this study was to elucidate the mechanisms underlying the differences in antiviral activity among A3H haplotypes. The naturally occurring A3H hapI-GKE and hapII-RDD variants differ at three amino acid positions. A panel of six site-directed mutants containing combinations of the three variable residues was used to determine A3H protein expression, requirements of A3H virion incorporation, and A3H-Gag interactions. The catalytic activity of each A3H protein was assessed directly by using an Escherichia coli mutator assay. We found that the incorporation efficiencies of A3H variants into HIV-1 virions were comparable despite major differences in cellular expression. An assessment of the enzymes' catalytic activities showed that the deaminase activity of each A3H variant correlated with protein expression, suggesting similar enzymatic efficiencies. Surprisingly, virion incorporation experiments using Gag deletion mutants demonstrated that A3H haplotypes interacted with different Gag regions. A3H hapII-RDD associated with nucleocapsid in an RNA-dependent manner, whereas A3H hapI-GKE associated with the C-terminal part of matrix and the N-terminal capsid domain. Our results show that the A3H hapII-RDD interaction with nucleocapsid is critical for its antiviral activity and that the inability of A3H hapI-GKE to interact with nucleocapsid underlies its limited antiviral potential. Thus, the antiviral activity of A3H haplotypes is determined by its incorporation into the viral core, in proximity to the reverse transcription complex.