Ebola virus (EBOV) is an enveloped negative-sense RNA virus and a member of the filovirus family. Nucleoprotein (NP) expression alone leads to the formation of inclusion bodies (IBs), which are critical for viral RNA synthesis. The matrix protein, VP40, not only plays a critical role in virus assembly/budding, but also can regulate transcription and replication of the viral genome. However, the molecular mechanism by which VP40 regulates viral RNA synthesis and virion assembly/budding is unknown. Here, we show that within IBs the N-terminus of NP recruits VP40 and is required for VLP-containing NP release. Furthermore, we find four point mutations (L692A, P697A, P698A and W699A) within the C-terminal hydrophobic core of NP result in a stronger VP40–NP interaction within IBs, sequestering VP40 within IBs, reducing VP40–VLP egress, abolishing the incorporation of NC-like structures into VP40–VLP, and inhibiting viral RNA synthesis, suggesting that the interaction of N-terminus of NP with VP40 induces a conformational change in the C-terminus of NP. Consequently, the C-terminal hydrophobic core of NP is exposed and binds VP40, thereby inhibiting RNA synthesis and initiating virion assembly/budding.