Coronavirus envelope (E) proteins play an important, not fully understood role(s) in the virus life cycle. All E proteins have conserved cysteine residues located on the carboxy side of the long hydrophobic domain, suggesting functional significance. In this study, we confirmed that mouse hepatitis coronavirus A59 E protein is palmitoylated. To understand the role of the conserved residues and the necessity of palmitoylation, three cysteines at positions 40, 44, and 47 were changed singly and in various combinations to alanine. Double- and triple-mutant E proteins resulted in decreased virus-like particle output when coexpressed with the membrane (M) protein. Mutant E proteins were also studied in the context of a full-length infectious clone. Single-substitution viruses exhibited growth characteristics virtually identical to those of the wild-type virus, while the double-substitution mutations gave rise to viruses with less robust growth phenotypes indicated by smaller plaques and decreased virus yields. In contrast, replacement of all three cysteines resulted in crippled virus with significantly reduced yields. Triple-mutant viruses did not exhibit impairment in entry. Mutant E proteins localized properly in infected cells. A comparison of intracellular and extracellular virus yields suggested that release is only slightly impaired. E protein lacking all three cysteines exhibited an increased rate of degradation compared to that of the wild-type protein, suggesting that palmitoylation is important for the stability of the protein. Altogether, the results indicate that the conserved cysteines and presumably palmitoylation are functionally important for virus production.