We have identified mutations in the human immunodeficiency virus type 1 (HIV-1) matrix protein (MA) which block infectivity of virions pseudotyped with murine leukemia virus (MuLV) envelope (Env) glycoproteins without affecting infectivity conferred by HIV-1 Env or vesicular stomatitis virus G glycoproteins. This inhibition is very potent and displays a strong transdominant effect; infectivity is reduced more than 100-fold when wild-type and mutant molecular clones are cotransfected at a 1:1 ratio. This phenomenon is observed with both ecotropic and amphotropic MuLV Env. The MA mutations do not affect the incorporation of MuLV Env into virions. We demonstrate that in HIV-1 virions pseudotyped with MuLV Env, the HIV-1 protease (PR) efficiently catalyzes the cleavage of the p15(E) transmembrane (TM) protein to p12(E). Immunoprecipitation analysis of pseudotyped virions reveals that the mutant MA blocks this HIV-1 PR-mediated cleavage of MuLV TM. Furthermore, the transdominant inhibition exerted by the mutant MA on wild-type infectivity correlates with the relative level of p15(E) cleavage. Consistent with the hypothesis that abrogation of infectivity imposed by the mutant MA is due to inhibition of p15(E) cleavage, mutant virions are significantly more infectious when pseudotyped with a truncated p12(E) form of MuLV Env. These results indicate that HIV-1 Gag sequences can influence the viral PR-mediated processing of the MuLV TM Env protein p15(E). These findings have implications for the development of HIV-1-based retroviral vectors pseudotyped with MuLV Env, since p15(E) cleavage is essential for activating membrane fusion and virus infectivity.