Enveloped virus particles are formed by budding from infected-cell membranes. For paramyxoviruses, viral matrix (M) proteins are key drivers of virus assembly and budding. However, other paramyxovirus proteins, including glycoproteins, nucleocapsid (NP or N) proteins, and C proteins, are also important for particle formation in some cases. To investigate the role of NP protein in parainfluenza virus 5 (PIV5) particle formation, NP protein truncation and substitution mutants were analyzed. Alterations near the C-terminal end of NP protein completely disrupted its virus-like particle (VLP) production function and significantly impaired M-NP protein interaction. Recombinant viruses with altered NP proteins were generated, and these viruses acquired second-site mutations. Recombinant viruses propagated in Vero cells acquired mutations that mainly affected components of the viral polymerase, while recombinant viruses propagated in MDBK cells acquired mutations that mainly affected the viral M protein. Two of the Vero-propagated viruses acquired the same mutation, V/P(S157F), found previously to be responsible for elevated viral gene expression induced by a well-characterized variant of PIV5, P/V-CPI(-). Vero-propagated viruses caused elevated viral protein synthesis and spread rapidly through infected monolayers by direct cell-cell fusion, bypassing the need to bud infectious virions. Both Vero- and MDBK-propagated viruses exhibited infectivity defects and altered polypeptide composition, consistent with poor incorporation of viral ribonucleoprotein complexes (RNPs) into budding virions. Second-site mutations affecting M protein restored interaction with altered NP proteins in some cases and improved VLP production. These results suggest that multiple avenues are available to paramyxoviruses for overcoming defects in M-NP protein interaction.