Retroviral proteases (PRs) cleave the viral polyprotein precursors into functional mature proteins late during particle release and are essential for viral replication. Unlike most retroviruses, beta-retroviruses, including Mason-Pfizer monkey virus (M-PMV), assemble immature capsids within the cytoplasm of the cell. The activation of beta-retroviral proteases must be highly regulated, because processing of the Gag-related polyprotein precursors occurs only after transport of immature capsids to the plasma membrane and budding. Several beta-retroviral proteases have unique C-terminal extension sequences, containing a glycine-rich motif (G-patch), which specifically binds in vitro to single-stranded nucleic acids. In M-PMV PR the G-patch is removed in vitro as well as in vivo by autoproteolytic processing to yield truncated active forms of PR. To investigate the role of the G-patch domain on the virus life cycle, we introduced mutations within the C-terminal domain of protease. We found that the G-patch domain of M-PMV PR is not required for the processing of viral polyproteins, but it significantly influences the infectivity of M-PMV, the activity of reverse transcriptase, and assembly of immature capsid within the cells. These results demonstrate for the first time that the G-patch domain of M-PMV PR is critical for the life cycle of beta-retroviruses, and its evolutionary conservation within members of this genus suggests its importance for retroviruses that display D-type morphology.