The fusion glycoprotein (Fo) of Newcastle disease virus is cleaved at an intracellular site (Nagai et al., Virology 69:523-538, 1976) into F1 and F2. This result was confirmed by comparing the transit time of the fusion protein to the cell surface with the time course of cleavage of Fo. The time required for cleavage of half of the pulse-labeled Fo protein is ca. 40 min faster than the half time of the transit of the fusion protein to the cell surface. To determine the cell compartment in which cleavage occurs, use was made of inhibitors which block glycoprotein migration at specific points and posttranslational modifications known to occur in specific cell membranes. Cleavage of Fo is inhibited by carbonyl cyanide m-chlorophenylhydrazone; thus, cleavage does not occur in the rough endoplasmic reticulum. Monensin blocks the incorporation of Newcastle disease virus glycoproteins into virions and blocks the cleavage of the fusion glycoprotein. However, Fo cannot be radioactively labeled with [3H] fucose, whereas F1 is readily labeled. These results argue that cleavage occurs in the trans Golgi membranes or in a cell compartment occupied by glycoproteins quite soon after their transit through the trans Golgi membranes. The implications of the results presented for the transit times of the fusion protein between subcellular organelles are discussed.