The transforming protein of Rous sarcoma virus, pp60v-src, is covalently coupled to myristic acid by an amide linkage to glycine 2. Myristylation promotes the association of pp60v-src with cellular membranes, and this subcellular location is essential for transforming activity. The findings presented here, in conjunction with the previous reports of others, imply that the seventh amino acid encoded by v-src might be important in the myristylation reaction. Replacement of lysine 7 by asparagine greatly reduced the myristylation, membrane association, and transforming activity of pp60v-src. In contrast, substitution of arginine at residue 7 had no effect on any of these properties of pp60v-src. Addition of amino acids 1 to 7 encoded by v-src was sufficient to cause myristylation of a src-pyruvate kinase fusion protein. We conclude that the recognition sequence for myristylation of pp60v-src comprises amino acids 1 to 7 and that lysine 7 is a critical component of this sequence.