It has been widely documented that the nucleocapsid protein p12 (NC) of Rous sarcoma virus (RSV) has a role in the encapsidation and maturation of the virus genomic RNA during particle formation, and particularly important appear to be the Cys-His motifs of this protein. Since some retroviruses only have one such motif, we have investigated the significance of the two distinct Cys-His motifs of RSV NC. The analysis of the phenotype of virus NC mutants with precise rearrangements or duplications of the motifs highlights the following features. (i) The two motifs are not functionally equivalent. (ii) The order and number of Cys-His motifs are less important for RSV NC than the presence of two distinct motifs for both the encapsidation of virus genomic RNA and maintenance of the integrity of the RNA after particle formation. (iii) The proximal motif has a distinct function in the virus replication cycle other than RNA encapsidation and dimerization. (iv) The presence of three Cys-His motifs reduces virus infectivity and leads to high-frequency deletion events (of one of the motifs) after infection: the resulting RNA species encode a wild type-like NC protein restoring full infectivity to the progeny virus particles. Additionally, the data suggest that this occurs only after infection. The deletion probably arises by intramolecular displacement of the replication complex between repeat sequences.