The assembly and budding of Sindbis virus, a prototypic member of the alphavirus subgroup in the family Togaviridae, requires a specific interaction between the nucleocapsid core and the membrane-embedded glycoproteins E1 and E2. These glycoproteins are modified posttranslationally by the addition of palmitic acid, and inhibitors of acylation interfere with this budding process (M.J. Schlesinger and C. Malfer, J. Biol. Chem. 257:9887-9890, 1982). This report describes the use of site-directed mutagenesis to identify two of the acylation sites in the E2 glycoprotein as the cysteines near the carboxyl terminus of the protein which is oriented to the cytoplasmic domain of this type 1 transmembrane protein. Additional mutations were made at two prolines within a hydrophobic sequence of E2 that is highly conserved among several alphaviruses, and the mutant viruses were aberrant in assembly and particle formation. These data support earlier studies indicating that the native structure of the cytoplasmic domain of E2 is essential for proper assembly of this enveloped virus.