We previously described an avian sarcoma-leukosis virus (ASLV) insertion mutation that causes a decrease in the ratio of unspliced to spliced RNA in vivo, resulting in a replication defect. Pseudorevertant viruses containing cis-acting suppressor mutations that restored the normal ratio were isolated. One class of the suppressor mutations consists of single-base changes or small deletions near the 3' splice site, while another consists of deletions in the 3' exon. In this paper we report results from an in vitro analysis of wild-type, mutant, and pseudorevertant pre-mRNA splicing. We find that wild-type RNA is spliced inefficiently in vitro, and that the insertion mutation and suppressors act directly at the level of splicing. Characterization of splicing intermediates reveals that the insertion mutation and suppressor mutations located within the intron alter the pattern of lariat formation. In contrast, suppressor mutations consisting of 3' exon deletions act at an earlier step in the splicing pathway. Thus, the efficiency of splicing at the env 3' splice site can be affected at the level of spliceosome assembly, lariat formation, or cleavage at the 3' splice site and exon ligation.[Key Words: Retrovirus; splicing; splice site selection] Received September 18, 1990; revised version accepted December 13, 1990.Retrovirus RNA transcripts are subject to multiple pathways of RNA processing and transport (for a review, see Stoltzfus 1989). The primary full-length RNA po7lI transcript of -7-10 kb functions as genomic RNA for progeny virions and mRNA for structural proteins and enzymes. Both of these functions require transport of an intact viral RNA to the cytoplasm. In addition, a fraction of the full-length transcripts is spliced in the nucleus to generate subgenomic mRNAs that encode other viral proteins (Fig. lA). Thus, a balance between full-length RNA and spliced viral mRNAs is required for replication of retroviruses.Multiple CIS-acting sequences have been shown to play a role in splice site selection in cellular pre-mRNAs (for review, see Krainer and Maniatis 1988). These sequences include the 5' and 3' splice sites, the branchpoint sequence (BPS), and sequences within the flanking exons. Interaction of these cis-acting elements with small nuclear ribonuclear proteins (snRNPs) and many protein splicing factors leads to the assembly of spliceosomes in which the splicing reaction takes place (see Krainer and Maniatis 1988;Steitz et al. 1988; for recent reviews, see Bindereif and Green 1990).Retroviral transcripts are presumably processed by the same mechanisms as cellular pre-mRNAs. However, unlike most cellular pre-mRNAs, a portion of viral RNA transcripts escape splicing entirely. Balanced splicing of retroviral RNA is therefore a novel form of alternative splicing. An understanding of the mechanisms involved in this splicing may reveal both general and novel features of the splice site selection process. Several models for maintaining the balance of spliced and unspliced forms of retrovirus RNA have been pro...