The cytoplasmic tail of the immature Moloney murine leukemia virus (MoMuLV) envelope protein is approximately 32 amino acids long. During viral maturation, the viral protease cleaves this tail to release a 16-amino-acid R peptide, thereby rendering the envelope protein fusion competent. A series of truncations, deletions, and amino acid substitutions were constructed in this cytoplasmic tail to examine its role in fusion and viral transduction. Sequential truncation of the cytoplasmic tail revealed that removal of as few as 11 amino acids resulted in significant fusion when the envelope protein was expressed in NIH 3T3 cells, similar to that seen following expression of an R-less envelope (truncation of 16 amino acids). Further truncation of the cytoplasmic tail beyond the R-peptide cleavage site toward the membrane-spanning region had no additional effect on the level of fusion observed. In contrast, some deletions and nonconservative amino acid substitutions in the membrane-proximal region of the cytoplasmic tail (residues L602 to F605) reduced the amount of fusion observed in XC cell cocultivation assays, suggesting that this region influences the fusogenicity of full-length envelope protein. Expression of the mutant envelope proteins in a retroviral vector system revealed that decreased envelope-mediated cell-cell fusion correlated with a decrease in infectivity of the resulting virions. Additionally, some mutant envelope proteins which were capable of mediating cell-cell fusion were not efficiently incorporated into retroviral particles, resulting in defective virions. The cytoplasmic tail of MoMuLV envelope protein therefore influences both the fusogenicity of the envelope protein and its incorporation into virions.