Mammalian type C retroviral envelope proteins contain a variable proline-rich region (PRR), located between the N-terminal receptor-binding domain and the more highly conserved C-terminal portion of the surface (SU) subunit. We have investigated the role of the PRR in the function of murine leukemia virus (MuLV) envelope protein. In the MuLVs, the PRR contains a highly conserved N-terminal sequence and a hypervariable C-terminal sequence. Despite this variability, the amphotropic PRR could functionally substitute for the ecotropic PRR. The hypervariable region of the PRR was not absolutely required for envelope protein function. However, truncations in this region resulted in decreased levels of both the SU and TM proteins in viral particles and increased amounts of the uncleaved precursor protein, Pr85. In contrast, the N-terminal conserved region was essential for viral infectivity. Deletion of this region prevented the stable incorporation of envelope proteins into viral particles in spite of normal envelope protein processing, wild-type levels of cell surface expression, and a wild-type ability to induce syncytia in an XC cell cocultivation assay. However, higher levels of the SU protein were shed into the supernatant, suggesting a defect in SU-TM interactions. Our data are most consistent with a role for the PRR in stabilizing the overall structure of the protein, thereby affecting the proper processing of Pr85, SU-TM interactions, and the stable incorporation of envelope proteins into viral particles. In addition, we have demonstrated that the PRR can tolerate the insertion of a peptide-binding domain, making this a potentially useful site for constructing targetable retroviral vectors.