Foamy viruses (FVs) express the Gag protein as a precursor with a molecular mass of 74 kDa (pr74) from which a 70-kDa protein (p70) is cleaved by the viral protease. To gain a better understanding of FV Gag protein processing and function, we have generated and analyzed mutants in the C-terminal gag region of an infectious molecular clone. Our results show that p70 is an N-terminal cleavage product of pr74. However, we were unable to identify a p4 molecule. A virus mutant expressing p70 only was found to be replication competent, albeit at very low titers compared to those of wild-type virus. A strong tendency to synthesize and cleave a pr74 molecule was deduced from the occurrence of revertants upon transfection of this mutant. Substitution of the p6gag domain of human immunodeficiency virus type 1 for the p4 domain of FV resulted in a stable chimeric virus which replicated to titers 10 times lower than those of wild-type virus. FV Gag protein was found to be phosphorylated at serine residues. Mutagenesis of serines conserved in the p4 domain had no influence on viral replication in cell culture. The p70/p74 Gag cleavage was found to be required for viral infectivity, since mutagenesis of the putative cleavage site led to replication-incompetent virus. Interestingly, the cleavage site mutants were defective in the intracellular cDNA synthesis of virion DNA, which indicates that correct FV particle formation and the generation of virion DNA are functionally linked.