The surface glycoprotein of the Lassa virus, a member of the arenaviridae family, is synthesized as a 76-kDa precursor (GP-C) that is posttranslationally cleaved into an N-terminal 44-kDa subunit and a C-terminal membrane-anchored 36-kDa subunit. Cleavage occurs at the C-terminal end of the unusual recognition motif R-R-L-L. We show here that GP-C is cleaved in the endoplasmic reticulum by the cellular subtilase SKI-1/S1P, an enzyme that has so far been observed to be involved in cholesterol metabolism. Furthermore, we present evidence that only cleaved glycoprotein is incorporated into virions and that this is necessary for the formation of infectious virus. To our knowledge, there have been no previous reports of this type of viral glycoprotein processing, one that may be an interesting target for antiviral therapy.