To examine the potential role of the GAG precursor polyprotein in morphogenesis and assembly of the simian immunodeficiency virus (SIV), we have expressed the gag gene of SIVMac using a baculovirus expression vector. Infection of insect cells with recombinant virus containing the entire gag gene results in high expression of the GAG precursor protein, Pr57gag. The recombinant protein is myristylated and is released in the culture supernatant in an insoluble particulate form. A point mutation in the N-terminal glycine codon (Gly----Ala) inhibits myristylation. This mutated product is highly expressed but is not found in the culture supernatant. Electron microscopy and immunogold labelling of infected cells show that the native Pr57gag protein assembles into 100-120 nm virus-like particles that bud from the cell plasma membrane and are released in the culture supernatant. The unmyristylated protein also assembles into particulate structures which only accumulate inside the cells. These results demonstrate that the unprocessed GAG precursor of SIV can spontaneously assemble into particles in the absence of other viral proteins. Myristylation of the Pr57gag precursor is necessary for its association with the cell plasma membrane, for budding and for extracellular release.