The life cycle of HIV-1 requires extensive assistance from the host cell proteins and pathways. TSG101 is one of the cellular proteins involved in the budding process of HIV-1, and plays an important role in the cellular vacuolar protein sorting (Vps) pathway. Its main function being recognizing ubiquitinated cargo, TSG101 also proved to be essential for the budding process of HIV-1 virions. In this process, TSG101 is recruited from internal site of the infected cell to the budding site to aid in the release of the HIV-1 virus particles. Depletion of TSG101 from virus-producing cells can lead to a budding defect. Therefore, TSG101 is a potentially new attractive target for therapeutic intervention in AIDS. This review describes the structure and function of TSG101 and latest progress in the discovery of TSG101-directed HIV-1 inhibitors.