The requirements for SIV particle assembly and envelope incorporation were investigated using a baculovirus expression system. The Pr56gag precursor protein expressed under control of the polyhedrin promoter (pPolh) produced high levels of immature retrovirus-like particles (VLP) upon expression in Sf9 insect cells. To determine the optimal conditions for envelope protein (Env) incorporation into VLP, two recombinant baculoviruses expressing the SIV envelope protein under control of a very late pPolh or a hybrid late/very late capsid/polyhedrin (Pcap/polh) promoter and a recombinant expressing a truncated form of the SIV envelope protein (Envt) under the hybrid Pcap/polh promoter were compared. We have observed that utilization of the earlier hybrid promoter resulted in higher levels of Env expression on the cell surface and its incorporation into budding virus particles. We have also found that the Envt protein is transported to the cell surface of insect cells and incorporated into VLP more efficiently than full-length Env. In addition, we examined the effect of coexpression of the protease furin, which has been implicated in the proteolytic cleavage of the Env precursor gp160 in mammalian cells. Coexpression of furin in insect cells resulted in more efficient proteolytic cleavage into gp120 and gp41, and the cleaved proteins were incorporated into VLP.