The transmembrane (TM) subunits of retroviral envelope glycoproteins appear to direct the assembly of the glycoprotein precursor into a discrete oligomeric structure. We have examined mutant Rous sarcoma virus envelope proteins with truncations or deletions within the ectodomain of TM for their ability to oligomerize in a functional manner. Envelope proteins containing an intact surface (SU) domain and a TM domain truncated after residue 120 or 129 formed intracellular trimers in a manner similar to that of proteins that had an intact ectodomain and were efficiently secreted. Whereas independent expression of the SU domain yielded an efficiently transported molecule, proteins containing SU and 17, 29, 37, 59, 73, 88, and 105 residues of TM were defective in intracellular transport. With the exception of a protein truncated after residue 88 of TM, the truncated proteins were also defective in formation of stable trimers that could be detected on sucrose gradients. Deletion mutations within the N-terminal 120 amino acids of TM also disrupted transport to the Golgi complex, but a majority of these mutant glycoproteins were still able to assemble trimers. Deletion of residues 60 to 74 of TM caused the protein to remain monomeric, while a deletion C terminal of residue 88 that removed two cysteine residues resulted in nonspecific aggregation. Thus, it appears that amino acids throughout the N-terminal 120 residues of TM contribute to assembly of a transport-competent trimer. This region of TM contains two amino acid domains capable of forming alpha helices, separated by a potential disulfide-bonded loop. While the N-terminal helical sequence, which extends to residue 85 of TM, may be capable of mediating the formation of Env trimers if C-terminal sequences are deleted, our results show that the putative disulfide-linked loop and C-terminal alpha-helical sequence play a key role in directing the formation of a stable trimer that is competent for intracellular transport.