The Gag protein of Rous sarcoma virus has the ability to direct particle assembly at the plasma membrane in the absence of all the other virus-encoded components. An extensive deletion analysis has revealed that very large regions of this protein can be deleted without impairing budding and has suggested that the essential functions map to three discrete regions. In the studies reported here, we establish the location of assembly domain 2 (AD2) within the proline-rich p2b sequence of this Gag protein. AD2 mutants lacking the p2b sequence were completely defective for particle release even though their Gag proteins were tightly associated with the membrane fraction and exhibited high levels of protease activity. Mutations that inactivate the viral protease did not restore budding to wild-type levels for these mutants, indicating that the defect is not due simply to a loss of protease regulation. AD2 mutants could be rescued into dense particles in genetic complementation assays, indicating that their defect is not due to a gross alteration of the overall conformation of the protein and that the assembly function is not needed on every Gag molecule in the population. Several mutants with amino acid substitutions in the p2b sequence were found to have an intermediate capacity for budding. Inactivation of the protease of these mutants stabilized the Gag polyprotein within the cells and allowed an increase in particle release; however, the rate of budding remained slow. We favor the idea that AD2 is a dynamic region of movement, perhaps serving as a molecular hinge to allow the particle to emerge from the surface of the cell during budding.