The human immunodeficiency virus type 1 (HIV-1) assembly-and-release pathway begins with the targeting of the Gag precursor to the site of virus assembly. The molecular mechanism by which Gag is targeted to the appropriate subcellular location remains poorly understood. Based on the analysis of mutant Gag proteins, we and others have previously demonstrated that a highly basic patch in the matrix (MA) domain of Gag is a major determinant of Gag transport to the plasma membrane. In this study, we determined that in HeLa and T cells, the MA mutant Gag proteins that are defective in plasma membrane targeting form virus particles in a CD63-positive compartment, defined as the late endosome or multivesicular body (MVB). Interestingly, we find that in primary human macrophages, both wild-type (WT) and MA mutant Gag proteins are targeted specifically to the MVB. Despite the fact that particle assembly in macrophages occurs at an intracellular site rather than at the plasma membrane, we observe that WT Gag expressed in this cell type is released as extracellular virions with high efficiency. These results demonstrate that Gag targeting to and assembly in the MVB are physiologically important steps in HIV-1 virus particle production in macrophages and that particle release in this cell type may follow an exosomal pathway. To determine whether Gag targeting to the MVB is the result of an interaction between the late domain in p6(Gag) and the MVB sorting machinery (e.g., TSG101), we examined the targeting and assembly of Gag mutants lacking p6. Significantly, the MVB localization of Gag was still observed in the absence of p6, suggesting that an interaction between Gag and TSG101 is not required for Gag targeting to the MVB. These data are consistent with a model for Gag targeting that postulates two different cellular binding partners for Gag, one on the plasma membrane and the other in the MVB.