The murine leukemia virus envelope protein is synthesized as a precursor molecule, Pr85env, which is proteolytically cleaved at an arginine residue to produce two mature envelope proteins, gp70 and p15(E). The results presented here indicate that mutation to lysine of the arginine found at the envelope precursor cleavage site results in a precursor which is cleaved with an efficiency at least 10-fold lower than the efficiency with which the wild-type protein is cleaved. This mutation has been used to investigate the requirement for envelope protein processing in various aspects of retroviral infection. Viruses produced by cells transfected with mutant proviral clones are approximately 10-fold less infectious than wild-type viruses. Mutant viruses are incapable of inducing XC cell syncytium formation and are 100-fold less efficient than wild-type viruses at rendering cells resistant to superinfection. Envelope glycoproteins bearing the lysine mutation are found in reduced amounts on the surface of infected cells, and as a result mutant virions contain significantly less envelope protein than do wild-type virions. The phenotypic effects of the processing mutation described here are most likely the result of this paucity of envelope glycoproteins in virions carrying the mutation.