The functional roles of the matrix (MA) protein in the assembly and maturation of retroviruses was investigated with a series of MA mutants of Mason-Pfizer monkey virus (M-PMV), an immunosuppressive type D retrovirus. The mutants we describe here were generated by the introduction of random point mutations within the MA coding domain by use of sodium bisulphite mutagenesis. Studies of these mutants show that the MA protein plays a critical role in three different, sequential events in the final stages of type D retrovirus replication: (i) folding of the gag gene-encoded precursor poly-proteins into a stable conformation for capsid assembly in the cytoplasm of infected cells; (ii) capsid transport from the site of assembly to the plasma membrane; and (iii) capsid association with, and extrusion of the membrane during virus budding. The mutants described here interfere with or block M-PMV replication at each of these stages. Large numbers of preassembled capsids accumulate within the cytoplasm of transport-defective mutant-infected cells, suggesting that transport of M-PMV capsids to the plasma membrane is an active and specific intracellular targeting process. The initial association of the capsid with the membrane may depend upon this intracytoplasmic transport process but additional protein-lipid interactions that involve the MA protein are required for membrane extrusion around the preformed capsids; in cells infected with the budding-defective mutant, assembled capsids accumulate under the inner surface of the cell plasma membrane, and are retarded in their release from the infected cell.