The gag precursor polyprotein of Moloney murine leukemia virus (MuLV) is normally modified by myristylation of the N-terminal glycine. Previous work showed that the Pr65gag lacking the myristylation site does not associate with cellular membranes or assemble into virus particles. We now report that it also is not cleaved to the mature gag cleavage products within the cell and that it sediments as a free 65-kilodalton monomer in detergent-free cell extracts containing 0.3 M NaCl. Even when the cells containing the mutant are productively infected with wild-type MuLV, the mutant Pr65gag is not processed into cleavage products and is not incorporated into the virions produced by these cells. Thus, the mutant gag molecules seem unable to participate in the normal processes of self-assembly and maturation. We propose that myristate-mediated membrane association is an essential first step in MuLV assembly. This association may also play a role in budding of MuLV.