The release of retroviruses from the plasma membrane requires host factors that are believed to be recruited to the site of budding by the late (L) domain of the virus-encoded Gag protein. The L domain of Rous sarcoma virus (RSV) has been shown to interact with a ubiquitin (Ub) ligase, and budding of this virus is dependent on Ub. RSV is similar to other retroviruses in that it contains approximately 100 molecules of Ub, but it is unique in that none of these molecules has been found to be conjugated to Gag. If transient ubiquitination of RSV Gag is required for budding, then replacement of the target lysine(s) with arginine should prevent the addition of Ub and reduce budding. Based on known sites of ubiquitination in other viruses, the important lysines would likely reside near the L domain. In RSV, there are five lysines located just upstream of the L domain in a region of the matrix (MA) protein that is dispensable for membrane binding, and replacement of these with arginine (mutant 1-5KR) reduced budding 80 to 90%. The block to budding was found to be on the plasma membrane; however, the few virions that were released had normal size, morphology, and infectivity. Budding was restored when any one of the residues was changed back to lysine or when lysines were inserted in novel positions, either within this region of MA or within the downstream p10 sequence. Moreover, the 1-5KR mutant could be rescued into particles by coexpression of budding-competent Gag molecules. These data argue that the phenotype of mutant 1-5KR is not due to a conformational defect. Consistent with the idea that efficient budding requires a specific role for lysines, human T-cell leukemia virus type 1, which does not bud well compared to RSV and lacks lysines close to its L domain, was found to be released at a higher level upon introduction of lysines near its L domain. This report strongly supports the hypothesis that ubiquitination of the RSV Gag protein (and perhaps those of other retroviruses) is needed for efficient budding.