Vaccinia virus (VV) A17L gene encodes a 23-kDa protein that is proteolytically cleaved to generate a 21-kDa product that is incorporated into the viral particles. We have previously shown that the 21-kDa protein forms a stable complex with the VV 14-kDa envelope protein and suggested that the 21-kDa protein may serve to anchor the 14-kDa protein to the envelope of the virion (D. Rodríguez, J. R. Rodríguez, and M. Esteban, J. Virol. 67:3435-3440, 1993). To study the role of the 21-kDa protein in virion assembly, in this investigation we generated a VV recombinant, VVindA17L, that contains an inducible A17L gene regulated by the E. coli repressor/operator system. In the absence of the inducer, shutoff of the A17L gene was complete, and this shutoff correlated with a reduction in virus yields of about 3 log units. Although early and late viral polypeptides are normally synthesized in the absence of the A17L gene product, proteolytic processing of the major p4a and p4b core proteins was clearly impaired under these conditions. Electron microscopy examination of cells infected in the absence of isopropylthiogalactopyranoside (IPTG) revealed that virion morphogenesis was completely arrested at a very early stage, even prior to the formation of crescent-shaped membranes, which are the first distinguishable viral structures. Only electron-dense structures similar to rifampin bodies, but devoid of membranes, could be observed in the cytoplasm of cells infected with VVindA17L under nonpermissive conditions. Considering the most recent assembly model presented by Sodeik et al. (B. Sodeik, R. W. Doms, M. Ericsson, G. Hiller, C. E. Machamer, W. van't Hof, G. van Meer, B. Moss, and G. Griffiths, J. Cell Biol. 121:521-541, 1993), we propose that this protein is targeted to the intermediate compartment and is involved in the recruitment of these membranes to the viral factories, where it forms the characteristic crescent structures that subsequently result in the formation of virions.