A replication-defective feline leukemia virus molecular clone, 61B, has been shown to cause immunodeficiency in cats and cytopathicity in T cells after a long latency period when coinfected with a minimally pathogenic helper virus (J. Overbaugh, E. A. Hoover, J. I. Mullins, D. P. W. Burns, L. Rudensey, S. L. Quackenbush, V. Stallard, and P. R. Donahue, Virology 188:558-569, 1992). The long-latency phenotype of 61B has been mapped to four mutations in the extracellular domain of the envelope transmembrane protein, and we report here that these mutations cause a defect in envelope protein processing. Immunoprecipitation analyses demonstrated that the 61B gp85 envelope precursor was produced but that further processing to generate the surface protein (SU/gp70) and the transmembrane protein (TM/p15E) did not occur. The 61B precursor was not expressed on the cell surface and appeared to be retained in the endoplasmic reticulum or Golgi apparatus. Two of the four 61B-specific amino acid changes are located within a putative cysteine loop in a region of TM that is conserved among retroviruses. Introduction of these two amino acid changes into a replication-competent highly cytopathic virus resulted in the production of noninfectious virus that exhibited an envelope-protein-processing defect. This analysis suggests that mutations in a conserved region within a putative cysteine loop affect retroviral envelope protein maturation and viral infectivity.