N-linked glycans covering the surface of the HIV-1 glycoprotein gp120 are of major importance for the correct folding of this glycoprotein. Of the, on average, 24 N-linked glycans present on gp120, the glycan at Asn260 was reported to be essential for the correct expression of gp120 and gp41 in the virus particle and deletion of the N260 glycan in gp120 heavily compromised virus infectivity. We show here that gp160 containing the N260Q mutation reaches the Golgi apparatus during biosynthesis. Using pulse-chase experiments with [35S] methionine/cysteine, we show that oxidative folding was slightly delayed in case of mutant N260Q gp160 and that CD4 binding was markedly compromised compared to wild-type gp160. In the search of compensatory mutations, we found a mutation in the V1/V2 loop of gp120 (S128N) that could partially restore the infectivity of mutant N260Q gp120 virus. However, the mutation S128N did not enhance any of the above-mentioned processes so its underlying compensatory mechanism must be a conformational effect that does not affect CD4 binding per se. Finally, we show that mutant N260Q gp160 was cleaved to gp120 and gp41 to a much lower extent than wild-type gp160, and that it was subject of lysosomal degradation to a higher extent than wild-type gp160 showing a prominent role of this process in the breakdown of N260-glycan-deleted gp160, which could not be counteracted by the S128N mutation. Moreover, at least part of the wild-type or mutant gp160 that is normally targeted for lysosomal degradation reached a conformation that enabled CD4 binding.