During retrovirus assembly, Gag proteins bind to the inner leaflet of the plasma membrane to initiate the budding process. The molecular basis of this protein-lipid interaction is poorly understood. For the human, immunodeficiency virus type 1 Gag protein, we recently reported that the membrane-binding domain resides within the N-terminal 31 amino acids and consists of two components: myristate and a cluster of basic residues, which together promote membrane binding in vitro and budding in vivo (W. Zhou, L. J. Parent, J. W. Wills, and M. D. Resh, J. Virol. 68:2556-2569, 1994). The positively charged residues associate electrostatically with acidic phospholipids to stabilize membrane binding, while myristate provides membrane-binding energy via hydrophobic interactions. Here we demonstrate that the human immunodeficiency virus type 1 Gag membrane-binding domain can fully replace the membrane-targeting function of the N-terminal 100 residues of the non-myristylated Rous sarcoma virus (RSV) Gag protein. To further explore the importance of myristate and basic residues in membrane binding, we developed a gain-of-function assay whereby budding was restored to defective mutants of RSV Gag. Detailed mutational analysis revealed that the position, number, and context of charged residues are crucial to budding. Myristate provides additional membrane-binding energy, which is critical when a Gag protein is near the threshold of stable membrane association. Finally, viruses with altered matrix (MA) proteins that are noninfectious, even though they produce particles with high efficiency, were identified. Thus, we present the first evidence that the RSV MA sequence plays two distinct roles, membrane binding during particle assembly and a second, as yet undefined function required for viral infectivity.