In Sindbis virus, initiation of nucleocapsid core assembly begins with recognition of the encapsidation signal of the viral RNA genome by capsid protein. This nucleation event drives the recruitment of additional capsid proteins to fully encapsidate the genome, generating an icosahedral nucleocapsid core. The encapsidation signal of the Sindbis virus genomic RNA has previously been localized to a 132-nucleotide region of the genome within the coding region of the nsP1 protein, and the RNA-binding activity of the capsid was previously mapped to a central region of the capsid protein. It is unknown how capsid protein binding to encapsidation signal leads to ordered oligomerization of capsid protein and nucleocapsid core assembly. To address this question, we have developed a mobility shift assay to study this interaction. We have characterized a 32 amino acid peptide capable of recognizing the Sindbis virus encapsidation signal RNA. Using this peptide, we were able to observe a conformational change in the RNA induced by capsid protein binding. Binding is tight (K(d)(app) = 12 nM), and results in dimerization of the capsid peptide. Mutational analysis reveals that although almost every predicted secondary structure within the encapsidation signal is required for efficient protein binding, the identities of the bases within the helices and hairpin turns of the RNA do not need to be maintained. In contrast, two purine-rich loops are essential for binding. From these data, we have developed a model in which the encapsidation signal RNA adopts a highly folded structure and this folding process directs early events in nucleocapsid assembly.