Recently we demonstrated that the co-expressed coronavirus membrane proteins have the capacity to assemble viral envelopes which are similar to normal virus particles in dimensions and appearance, and which can form independent of a nucleocapsid (Vennema et al., 1996). For the formation of these particles only the M and the E protein are required; the S protein is dispensable but is incorporated when present. As we illustrate here, this virus-like particle assembly system is an ideal tool to study the interactions between the essential assembly partners M and E in molecular detail. Taking a mutagenetic approach we demonstrate that envelope assembly is critically sensitive to changes in the primary structure of both terminal domains of the M protein. The effects were most dramatically observed after mutation of the carboxy-terminal domain where the deletion of just one single amino acid at the extreme terminus abolished particle formation almost completely. But also some subtle mutations in the amino-terminal domain were severely inhibitory to the assembly process. Interestingly, mutant M proteins that were themselves incompetent to support particle formation appeared to inhibit, in a concentration dependent manner, the assembly of particles by wild-type M and E protein.