The cellular E2 Sumo conjugase, Ubc9 interacts with HIV-1 Gag, and is important for the assembly of infectious HIV-1 virions. In the previous study we demonstrated that in the absence of Ubc9, a defect in virion assembly was associated with decreased levels of mature intracellular Envelope (Env) that affected Env incorporation into virions and virion infectivity. We have further characterized the effect of Ubc9 knockdown on HIV Env processing and assembly. We found that gp160 stability in the endoplasmic reticulum (ER) and its trafficking to the trans-Golgi network (TGN) were unaffected, indicating that the decreased intracellular mature Env levels in Ubc9-depleted cells were due to a selective degradation of mature Env gp120 after cleavage from gp160 and trafficked out of the TGN. Decreased levels of Gag and mature Env were found to be associated with the plasma membrane and lipid rafts, which suggest that these viral proteins were not trafficked correctly to the assembly site. Intracellular gp120 were partially rescued when treated with a combination of lysosome inhibitors. Taken together our results suggest that in the absence of Ubc9, gp120 is preferentially degraded in the lysosomes likely before trafficking to assembly sites leading to the production of defective virions. This study provides further insight in the processing and packaging of the HIV-1 gp120 into mature HIV-1 virions.