Site-directed mutagenesis has shown that the nucleocapsid (NC) protein of Rous sarcoma virus (RSV) is required for packaging and dimerization of viral RNA. However, it has not been possible to demonstrate, in vivo or in vitro, specific binding of viral RNA sequences by NC. To determine whether specific packaging of viral RNA is mediated by NC in vivo, we have constructed RSV mutants carrying sequences of Moloney murine leukemia virus (MoMuLV). Either the NC coding region alone, the psi RNA packaging sequence, or both the NC and psi sequences of MoMuLV were substituted for the corresponding regions of a full-length RSV clone to yield chimeric plasmid pAPrcMNC, pAPrc psi M, or pAPrcM psi M, respectively. In addition, a mutant of RSV in which the NC is completely deleted was tested as a control. Upon transfection, each of the chimeric mutants produced viral particles containing processed core proteins but were noninfectious. Thus, MoMuLV NC can replace RSV NC functionally in the assembly and release of mature virions but not in infectivity. Surprisingly, the full-deletion mutant showed a strong block in virus release, suggesting that NC is involved in virus assembly. Mutant PrcMNC packaged 50- to 100-fold less RSV RNA than did the wild type; in cotransfection experiments, MoMuLV RNA was preferentially packaged. This result suggests that the specific recognition of viral RNA during virus assembly involves, at least in part, the NC protein.