The molecular biology of spuma or foamy retroviruses is different from that of the other members of the Retroviridae. Among the distinguishing features, the N-terminal domain of the foamy virus Env glycoprotein, the 16-kDa Env leader protein Elp, is a component of released, infectious virions and is required for particle budding. The transmembrane protein Elp specifically interacts with N-terminal Gag sequences during morphogenesis. In this study, we investigate the mechanism of Elp release from the Env precursor protein. By a combination of genetic, biochemical, and biophysical methods, we show that the feline foamy virus (FFV) Elp is released by a cellular furin-like protease, most likely furin itself, generating an Elp protein consisting of 127 amino acid residues. The cleavage site fully conforms to the rules for an optimal furin site. Proteolytic processing at the furin cleavage site is required for full infectivity of FFV. However, utilization of other furin proteases and/or cleavage at a suboptimal signal peptidase cleavage site can partially rescue virus viability. In addition, we show that FFV Elp carries an N-linked oligosaccharide that is not conserved among the known foamy viruses.In retroviruses, proteolytic processing of the structural Gag and enzymatic Pol proteins is executed by the virus-encoded protease (6). In contrast, the Env glycoprotein precursors are considered to be processed by two cellular proteases (8,13,19). The first cleavage occurring in the endoplasmic reticulum (ER) removes the signal peptide (SP). In analogy to cellular secretory or transmembrane (TM) proteins, proteolytic removal of the SP which targets the Env precursor to the secretory pathway via the ER and Golgi apparatus is considered to be performed by cellular signal peptidases (SPases) (for a review, see references 17 and 19). The second cleavage, which separates the surface (SU) and TM domains, is catalyzed by a member of the furin convertase protease family, often the furin protease itself (8,28). Related glycoprotein processing mechanisms also apply to a wide variety of other membrane viruses such as influenza virus and Ebola virus (4).The processing of cellular type I membrane proteins (or even polyprotein precursors) by ER-resident SPases has been exploited by many viruses leading to SPs of about 15 to more than 50 amino acid residues independent of whether the protein is of viral or cellular origin (17). In addition, the SP is rapidly degraded by signal peptide peptidases, a process which is often directly linked to the presentation of the corresponding cleavage products by the major histocompatibility complex I for purposes of immune surveillance (17).However, for two distinct foamy retroviruses, namely human and feline foamy virus (HFV and FFV), the 14-to 18-kDa N-terminal Env cleavage product was clearly detectable as a component of released virus particles (11,14,15,35). We showed that the N terminus of FFV Env, termed the Env leader protein (Elp), is located inside particles, confirming that specific interact...