Coreceptor switching from CCR5 to CXCR4 is common during chronic HIV-1 infection, but is even more common in individuals who have failed antiretroviral therapy (ART). Prior studies have suggested rapid mutation and/or recombination of HIV-1 envelope (env) genes during coreceptor switching. We compared the functional and genotypic changes in env of viruses from viremic subjects who had failed ART just before and after coreceptor switching and compared those to viruses from matched subjects without coreceptor switching. Analysis of multiple unique functional env clones from each subject revealed extensive diversity at both sample time points and rapid diversification of sequences during the 4-month interval in viruses from both 9 subjects with coreceptor switching and 15 control subjects. Only two subjects had envs with evidence of recombination. Three findings distinguished env clones from subjects with coreceptor switching from controls: (1) lower entry efficiency via CCR5; (2) longer V1/V2 regions; and (3), lower nadir CD4 T cell counts during prior years of infection. Most of these subjects harbored virus with lower replicative capacity associated with protease (PR) and/or reverse transcriptase inhibitor resistance mutations, and the extensive diversification tended to lead either to improved entry efficiency via CCR5 or the gain of entry function via CXCR4. These results suggest that R5X4 or X4 variants emerge from a diverse, low-fitness landscape shaped by chronic infection, multiple ART resistance mutations, the availability of target cells, and reduced entry efficiency via CCR5.