Retroviral nucleocapsid (NC) proteins are molecular chaperones that facilitate nucleic acid (NA) remodeling events critical in viral replication processes such as reverse transcription. Surprisingly, the NC protein from human T-cell leukemia virus type 1 (HTLV-1) is an extremely poor NA chaperone. Using bulk and single molecule methods, we find that removal of the anionic C-terminal domain (CTD) of HTLV-1 NC results in a protein with chaperone properties comparable with that of other retroviral NCs. Increasing the ionic strength of the solution also improves the chaperone activity of full-length HTLV-1 NC. To determine how the CTD negatively modulates the chaperone activity of HTLV-1 NC, we quantified the thermodynamics and kinetics of wild-type and mutant HTLV-1 NC/NA interactions. The wild-type protein exhibits very slow dissociation kinetics, and removal of the CTD or mutations that eliminate acidic residues dramatically increase the protein/DNA interaction kinetics. Taken together, these results suggest that the anionic CTD interacts with the cationic N-terminal domain intramolecularly when HTLV-1 NC is not bound to nucleic acids, and similar interactions occur between neighboring molecules when NC is NA-bound. The intramolecular N-terminal domain-CTD attraction slows down the association of the HTLV-1 NC with NA, whereas the intermolecular interaction leads to multimerization of HTLV-1 NC on the NA. The latter inhibits both NA/NC aggregation and rapid protein dissociation from single-stranded DNA. These features make HTLV-1 NC a poor NA chaperone, despite its robust duplex destabilizing capability.