The transformation-specific protein pp60(src) coded for by avian sarcoma viruses and its associated protein kinase activity is present in virus particles of Rous sarcoma virus, Schmidt-Ruppin strain, subgroup D. Quantitative comparison of the immunoglobulin G-phosphorylating activity in Schmidt-Ruppin D virus and Schmidt-Ruppin D virus-transformed fibroblasts indicated that there was two- to fourfold less activity in the virus particles. Disruption of virus particles with nonionic detergent demonstrated that the protein kinase activity fractionated together with the viral membrane protein gp85. Therefore, viral membranes were isolated by floating detergent-disrupted virus through a discontinuous sucrose density gradient. At a characteristic density corresponding to 26% sucrose, viral membranes were identified by the radioactively labeled viral glycoprotein and furthermore by the membrane marker enzyme Na(+)-K(+)-stimulated, Mg(2+)-activated ATPase and were visualized by electron microscopy. Contamination by cell membranes could be ruled out, since (i) the virus preparation was free of cell membrane contaminants as judged from electron microscopy, (ii) floating of intact virus did not release membraneous material, and (iii) virus-free tissue culture fluid from Schmidt-Ruppin D virus-transformed nonproducer cells (which potentially contain cell membranes) did not contribute any immunoglobulin G-phosphorylating activity after mixing with nontransforming virus and pelleting it. Both pp60(src) and the protein kinase activity were found to be associated with the viral membrane. Solubilization of virus by detergent released two phosphoproteins, with molecular weights of 42,000 and 45,000 which reacted with sera specific for pp60(src) and revealed protein kinase activity but which were not membrane bound and may have represented degradation products of pp60(src). Surface iodination of intact virus particles (harvested at 3-h intervals) did not result in radioactive labeling of pp60(src), whereas collection at 24-h intervals allowed iodination of pp60(src). In contrast to the viral glycoprotein gp85, the iodinated virion-associated pp60(src) was insensitive to mild proteolytic treatment. Binding to tumorbearing-rabbit serum, immunoglobulin G phosphorylation, and endogenous phosphorylation of 60,000-, 45,000-and 42,000-dalton proteins required lysed virus and were not possible with intact virus. These results indicated that pp60(src) was embedded within the viral membrane. Membrane proteins phosphorylated in vitro were analyzed for their phosphoamino acid composition. Eight polypeptides exhibited phosphorylation in tyrosine and were absent in nontransforming viral controls.