Assembly of retroviruses, including HIV-1, involves movement of newly synthesized viral proteins and RNA to the plasma membranes of host cells. The major homology region (MHR, aa 285-304), a highly conserved sequence in the capsid domain of the HIV-1 Gag precursor polyprotein, plays a critical, but unknown, role in infectious particle assembly. Mutations of invariant residues in the sequence have pleiotropic effects: Mutation of Gln287 blocks viral assembly while mutation of Arg299 permits assembly, but blocks formation of infectious particles. In this report, we demonstrate that Gag proteins lacking the entire MHR accumulated in the cytoplasm of transfected COS-1 cells, as did the wild-type protein, but were processed in a defective manner at the cellular membrane resulting in impaired particle assembly. To further examine the role of the MHR in membrane association, membrane binding of unmyristylated recombinant Gag proteins with alterations in the MHR was investigated in vitro. The wild-type Gag precursor bound to acidic phospholipid vesicles highly efficiently, as determined by fluorescence spectroscopy or velocity sedimentation. In contrast, deletion of the entire MHR reduced membrane affinity an average of approximately 3-fold or greater. Mutation of the invariant Gln287 residue disrupted membrane affinity approximately 6-fold relative to the wild-type, which was similar to the level of inhibition obtained by deletion of a membrane-binding signal previously identified in the matrix domain of the Gag precursor. Mutation of the invariant Arg299 residue reduced the affinity to a lesser extent. The results indicate that correct membrane binding is determined not only by signals in the MA domain of the precursor but also by sequences in the CA domain of Gag. We speculate that defects in the highly conserved MHR affect a Gag conformation that is required for productive interactions at the membrane assembly site.