The coronavirus mouse hepatitis virus (MHV) is an enveloped positive stranded RNA virus. In infected cells MHV produces a 3' coterminal nested set of subgenomic messenger RNAs. Only the genomic RNA, however, is encapsidated by the nucleocapsid protein and incorporated in infectious MHV virions. It is believed that an RNA packaging signal (Ps), present only in the genomic RNA, is responsible for this selectivity. Earlier studies mapped this signal to a 69-nt stem-loop structure positioned in the 3' end of ORF1b. The selective encapsidation mechanism probably initiates by specific interaction of the packaging signal with the nucleocapsid protein. In this study we demonstrate the in vitro interaction of the MHV-A59 nucleocapsid protein with the packaging signal of MHV using gel retardation and UV cross-linking assays. This interaction was observed not only with the nucleocapsid protein from infected cells but also with that from purified virions and from cells expressing a recombinant nucleocapsid protein. The specificity of the interaction was demonstrated by competition experiments with nonlabeled Ps containing RNAs, tRNA, and total cytoplasmic RNA. The results indicated that no virus specific modification of the N-protein or the presence of other viral proteins are required for this in vitro intervention. The assays described in this report provide us with a powerful tool for studying encapsidation (initiation) in more detail.