We have investigated the specificity of the proteolytic cleavage of the Rous sarcoma virus glycoprotein precursor by introducing two mutations into the putative cleavage region (Arg-Arg-Lys-Arg). We show that neither a deletion of the cleavage sequence nor a glutamic acid for lysine substitution altered intracellular transport or surface expression of the env gene products. However, both the four-amino-acid deletion and the glutamic acid substitution block processing of the env precursor. Susceptibility of the glutamic acid-substituted env precursor to proteases indicated that tertiary protein structure was unaffected. While inhibitor experiments suggested that more than one endopeptidase might be capable of mediating the proteolytic cleavage, the results presented here point to the presence in the Golgi apparatus of a novel endopeptidase, required for retroviral glycoprotein cleavage, that has a high specificity for lysine-containing peptides.