Self-propagating, infectious, virus-like vesicles (VLVs) are generated when an alphavirus RNA replicon expresses the vesicular stomatitis virus glycoprotein (VSV G) as the only structural protein.The mechanism that generates these VLVs lacking a capsid protein has remained a mystery for over 20 years. We present evidence that VLVs arise from membrane-enveloped RNA replication factories (spherules) containing VSV G protein that are largely trapped on the cell surface. After extensive passaging, VLVs evolve to grow to high titers through acquisition of multiple point mutations in their nonstructural replicase proteins. We reconstituted these mutations into a plasmid-based system from which hightiter VLVs can be recovered. One of these mutations generates a late domain motif (PTAP) that is critical for high-titer VLV production. We propose a model in which the VLVs have evolved in vitro to exploit a cellular budding pathway that is hijacked by many enveloped viruses, allowing them to bud efficiently from the cell surface. Our results suggest a basic mechanism of propagation that may have been used by primitive RNA viruses lacking capsid proteins. Capsids may have evolved later to allow more efficient packaging of RNA, greater virus stability, and evasion of innate immunity.VSV glycoprotein | evolution | SFV replicon | late domain