The dengue virus (DV) envelope (E) protein is important in mediating viral entry and assembly of progeny virus during cellular infection. Domains I and III (DI and DIII, respectively) of the DV E protein are connected by a highly conserved but poorly ordered region, the DI/DIII linker. Although the flexibility of the DI/DIII linker is thought to be important for accommodating the structural rearrangements undergone by the E protein during viral entry, the function of the linker in the DV infectious cycle is not well understood. In this study, we performed site-directed mutagenesis on conserved residues in the DI/DIII linker of the DV2 E protein and showed that the resulting mutations had little or no effect on the entry process but greatly affected virus assembly. Biochemical fractionation and immunofluorescence microscopy experiments performed on infectious virus as well as in a virus-like particle (VLP) system indicate that the DI/DIII linker mutants express the DV structural proteins at the sites of particle assembly near the ER but fail to form infectious particles. This defect is not due to disruption of E's interaction with prM and pr in immature and mature virions, respectively. Serial passaging of the DV2 mutant E-Y299F led to the identification of a mutation in the membrane-proximal stem region of E that fully compensates for the assembly defect of this DI/DIII linker mutant. Together, our results suggest a critical and previously unidentified role for the E protein DI/DIII linker region during the DV2 assembly process.