Cerulenin is an antibiotic that interferes with fatty acid synthesis in eukaryotic cells. It had been shown by Schultz and Oroszlan (1983), that murine leukemia virus (MuLV) Pr65gag, the polyprotein precursor to the virion core proteins contains the fatty acid myristate at its NH2 terminus. We showed that when 20 micrograms/ml of cerulenin is added for 3 h to mouse fibroblasts chronically infected with Moloney (M)-MuLV it causes a greater than 4-fold decrease in virus production. This is accompanied by an accumulation of uncleaved Pr65gag in the infected cells. Further, thin-section electron micrographs of cerulenin-treated cells show a 2-fold increase in the number of nascent-budding forms, as well as the appearance of aberrant viral forms at the cell membrane. This suggests that the failure to add myristic acid to Pr65gag prevents their proper assembly into viral particles.