Myristoylation of human immunodeficiency virus (HIV) Gag protein is essential for membrane targeting ofGag and production of viral particles. We show here that coexpression of wild-type and nonmyristoylated forms of HIV Gag resulted in severe inhibition of viral particle production, indicating that the nonmyristoylated counterpart had a dominant negative effect on particle release. When coexpressed, the nonmyristoylated Gag partially incorporated into membrane and lipid raft fractions, likely through coassembly with the wild-type Gag. The membrane and raft associations of the wild-type Gag appeared unaffected, and yet particle production was severely impaired. When viral particles produced from the coexpressing cells were analyzed, the wild-type Gag was more abundant than the nonmyristoylated Gag. Confocal microscopy showed that both forms of Gag were diffusely distributed in the cytoplasm of coexpressing cells but that a portion of the wild-type Gag population was accumulated in EEA1-and CD63-positive endosomes. The intracellular accumulation of Gag was more frequently observed at late time points. The Gag accumulation was also observed on the cell surface protrusion. Electron microscopy of the coexpressing cells revealed budding arrest phenotypes, including the occurrence of interconnected virions on the plasma membrane, and intracellular budding. We also show that the inhibition of particle production and the Gag accumulation to endosomes were suppressed when the nucleocapsid (NC) domain was deleted from the nonmyristoylated Gag, although the NC-deleted Gag was still capable of coassembly. Overall, our data indicate that coassembly with the nonmyristoylated Gag impairs HIV particle release, a phenomenon that may involve NC-mediated Gag-Gag interaction.