Mutational analyses of the p12 Gag phosphoprotein of Moloney murine leukemia virus have demonstrated its participation in both virus assembly and the early stages of infection. The molecular mechanisms by which p12 functions in these events are still poorly understood. We performed studies to examine the significance of p12 phosphorylation in the viral life cycle. Alanine substitutions were introduced at the potential phosphorylation sites in p12, and the resulting mutants were tested for replication. Mutant viruses with changes at S61 and S78 were severely impaired, whereas the other mutant viruses were viable. S61 was shown to be required for normal levels of phosphorylation of p12 in vivo. These defective mutant viruses showed no apparent alteration to Gag protein processing or reduction in the yield of virions after transient transfection, but the mutants failed to form circular viral DNAs in acutely infected cells. Sequence analysis of revertant clones derived from S(61,65)A mutant virus revealed two classes: one group with a single mutation at a residue adjacent to S61 and another group with mutations introducing new positive charges surrounding S61. In vivo [32P]orthophosphate labeling indicated that the rescue of the S(61,65)A mutant virus did not result in a significant increase in the phosphorylation level of p12. Alanine substitutions of an arginine-rich stretch near S61 (at R-66, -68, -70, and -71) resulted in the same phenotype as the S(61,65)A mutant virus. The restored function of S(61,65)A mutant virus by second or third site mutations may result from a structural change or the addition of positively charged residues in the arginine-rich region.