One missing link in the coronavirus assembly is the physical interaction between two crucial structural proteins, the membrane (M) and envelope (E) proteins. In this study, we demonstrate that the coronavirus infectious bronchitis virus E can physically interact, via a putative peripheral domain, with M. Deletion of this domain resulted in a drastic reduction in the incorporation of M into virus-like particles. Immunofluorescent staining of cells coexpressing M and E supports that E interacts with M and relocates M to the same subcellular compartments that E resides in. E was retained in the pre-Golgi membranes, prior to being translocated to the Golgi apparatus and the secretory vesicles; M was observed to exhibit similar localization and translocation profiles as E when coexpressed with E. Deletion studies identified the C-terminal 6-residue RDKLYS as the endoplasmic reticulum retention signal of E, and site-directed mutagenesis of the ؊4 lysine residue to glutamine resulted in the accumulation of E in the Golgi apparatus. The third domain of E that plays a crucial role in virus budding is a putative transmembrane domain present at the N-terminal region, because deletion of the domain resulted in a free distribution of the mutant protein and in dysfunctional viral assembly.Morphogenesis and assembly of mammalian enveloped RNA viruses are complex processes. During these processes, the viral core, consisting of viral RNA and core proteins, becomes wrapped in a membranous structure (viral envelope) derived from host cell membranes to form virion particles. The assembly process, which is referred to as budding, usually occurs at either the plasma or intracellular membranes. The formation of viral core, envelope, and the assembly of virus particles would involve interaction between viral proteins and host membrane components, among viral structural proteins and between viral proteins and viral RNA. Characterization of these events at the molecular level has been greatly facilitated by the understanding that viral structural proteins may contain all of the necessary information to dictate the assembly process. In fact, it was observed that coexpression of viral structural proteins would result in the formation of virus-like particles (VLPs) 1 in many different viral systems (1-9). In this study, we exploit the coronavirus VLP system to study the interaction between two structural proteins during coronavirus assembly and the implication of this interaction in the assembly and release of coronavirus particles. Coronavirus is the largest RNA virus known so far. It has a positive-sense, single-strand RNA genome of 27-30 kilobases in length. Despite of the huge genome size, coronavirus typically contains four structural proteins, i.e. a type I spike (S) glycoprotein required for infectivity, a phosphorylated nucleocapsid (N) protein that interacts with the viral genome to form a helical core, a major type III integral membrane (M) protein, and a minor type III envelope (E) protein (10 -15). A fifth protein, the hemagglut...