Cell fusion occurs in many cellular processes and viral infections. We developed a new, quantitative cell fusion assay based on the tetracycline-controlled transactivator (tTA)-induced expression of a luciferase reporter gene. The assay is objective, sensitive, linear over 2-3 orders of magnitude, amenable to microtiter-plate format, and generalizable to study fusion mediated by a variety of genes. Applied to HIV and MLV, cell fusion paralleled virus entry in terms of co-receptor requirements, need for post-translational processing of envelope, and complementation of SU mutations by soluble receptor-binding domain. However, biochemically measured fusion did not correlate with syncytia detected by standard light microscopy. When the assay indicated cell fusion occurred but overt syncytia were not observed, confocal microscopy using fluorescent protein markers showed that fusion was limited mainly to pairs of cells. Such nonprogressive cell fusion suggests that post-translational processing of envelope may be altered in heterokaryons co-expressing envelope and receptor.