The molecular mechanism by which retroviral Gag proteins are directed to the plasma membrane for the formation of particles (budding) is unknown, but it is widely believed that the MA domain, located at the amino terminus, plays a critical role. Consistent with this idea, we found that small deletions in this segment of the Rous sarcoma virus Gag protein completely blocked particle formation. The mutant proteins appear to have suffered only localized structural damage since they could be rescued (i.e., packaged into particles) when coexpressed with Gag proteins that are competent for particle formation. To our surprise, the effects of the MA deletions could be completely suppressed by fusing as few as seven residues of the myristylated amino terminus of the oncoprotein p60src to the beginning of the mutant Gag proteins. Particles produced by the chimeras were of the same density as the wild type. Two myristylated peptides having sequences distinct from that of p60src were entirely unable to suppress MA deletions, indicating that myristate alone is not a sufficient membrane targeting signal. We hypothesize that the amino terminus of p60src suppresses the effects of MA deletions by diverting the Rous sarcoma virus Gag protein from its normal site of assembly to the Src receptor for particle formation.