Moloney murine leukemia virus ecotropic envelope expression plasmids were used to demonstrate that the synthesis of the retroviral envelope SU and TM polypeptides can be uncoupled with retention of biologic activity. By substituting a glycosyl-phosphatidylinositol (GPI) membrane anchor for part or all of the retroviral envelope transmembrane protein and creating several deletion variants of the TM subunit, we have begun to dissect the role of the TM protein in envelope function. We show that a GPI-anchored envelope can be incorporated into virions and binds receptor. We found that the envelope cytoplasmic tail, while not required, influences the efficiency of retroviral transduction at some step after membrane fusion (possibly by interacting with core). The membrane-spanning domain of TM is involved in membrane fusion, and this function is distinct from its role as a membrane anchor. As few as eight amino acids of the putative membrane-spanning domain are sufficient to achieve membrane anchoring of envelope but not to mediate membrane fusion. In addition, though not required, the membrane-spanning domain may have some direct role in the incorporation of envelope into virions. Finally, the extracellular domain of TM, besides containing the putative fusion domain and interacting with SU, may influence the synthesis or stability and the glycosylation of envelope, possibly by affecting oligomerization of the complex and proper intracellular transit.