A permissive site for insertion of heterologous peptide sequences has been identified in the capsid proteins of AAV2. While attempting to use this site for insertion of a nuclear localization sequence, we have observed a drastic reduction in the yield of DNA-containing particles. ELISA analysis showed that capsid assembly was modestly affected, whereas genome encapsidation was more profoundly altered, a phenomenon we did not observed when a RGD peptide was inserted at the same location. Furthermore, the NLS viruses displayed poor transduction efficiency on HeLa and 293 cells. Altogether, these results indicate that the nature of the peptide inserted at position 587 in the capsid may have important consequences on both particle formation and infectivity.