Arteriviruses are positive-stranded RNA viruses with an efficiently organized, polycistronic genome. A short region between the replicase gene and open reading frame (ORF) 2 of the equine arteritis virus (EAV) genome was previously assumed to be untranslated. However, here we report that this segment of the EAV genome contains the 5' part of a novel gene (ORF 2a) which is conserved in all arteriviruses. The 3' part of EAV ORF 2a overlaps with the 5' part of the former ORF 2 (now renamed ORF 2b), which encodes the GS glycoprotein. Both ORF 2a and ORF 2b appear to be expressed from mRNA 2, which thereby constitutes the first proven example of a bicistronic mRNA in arteriviruses. The 67-amino-acid protein encoded by EAV ORF 2a, which we have provisionally named the envelope (E) protein, is very hydrophobic and has a basic C terminus. An E protein-specific antiserum was raised and used to demonstrate the expression of the novel gene in EAV-infected cells. The EAV E protein proved to be very stable, did not form disulfide-linked oligomers, and was not N-glycosylated. Immunofluorescence and immunoelectron microscopy studies showed that the E protein associates with intracellular membranes both in EAV-infected cells and upon independent expression. An analysis of purified EAV particles revealed that the E protein is a structural protein. By using reverse genetics, we demonstrated that both the EAV E and GS proteins are essential for the production of infectious progeny virus.