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A popular strategy for overcoming the limited plasma half-life of peptide heptad repeat 2 (HR2) fusion inhibitors against HIV-1 is conjugation with biocompatible polymers such as poly(ethylene glycol) (PEG). However, despite improved resistance to proteolysis and reduced renal elimination, covalent attachment of polymers often causes a loss in therapeutic potency. In this study, we investigated the molecular origins of the loss in potency upon conjugation of linear, midfunctional, and hyperbranched PEG-like polymers to peptides that inhibit HIV-1 host cell membrane fusion. Fluorescence binding assays revealed that polymer conjugation imparted mass transport limitations that manifested as coexistent slower association and dissociation rates from the gp41 target on HIV-1. Furthermore, reduced association kinetics rather than affinity disruption was responsible for the loss in antiviral potency. Finally, the binding assays indicated that the unmodified HR2-derived peptide demonstrated diffusion-limited binding. The observed high potency of the unmodified peptide in HIV-1 inhibition assays was therefore attributed to rapid peptide conformational changes upon binding to the gp41 prehairpin structure. This study emphasizes that the view in which polymer ligation to therapeutic peptides inadvertently leads to loss in potency due to a loss in binding affinity requires scientific verification on a case-by-case basis and that high peptide potency may be due to rapid target binding events.