The unprocessed Gag precursor from HIV-1, when expressed in recombinant baculovirus-infected insect cells, is targeted to the plasma membrane and assembles in 100-120 nm particles budding from the cell surface. This process mimics HIV immature particle formation and is dependent on myristoylation of the N-terminal glycine, as deletion of the latter results in particle accumulation in the cytoplasm and, interestingly, in the nucleus, pointing to a potential role of this non-fatty-acid-acylated species in the viral life cycle. Inclusion of the pol gene in the construct results in efficient processing of Pr55gag and a pronounced decrease in particle formation. Deletion of the C terminus (p16) of the Gag precursor, including the finger domains, abolishes particle assembly, but membrane targeting and evagination still occur. Heterologous expression in insect cells may prove very useful for the study of the molecular events leading to retroviral particle morphogenesis.