Paramyxoviruses are known to replicate in the cytoplasm and bud from the plasma membrane. Matrix is the major structural protein in paramyxoviruses that mediates viral assembly and budding. Curiously, the matrix proteins of a few paramyxoviruses have been found in the nucleus, although the biological function associated with this nuclear localization remains obscure. We report here that the nuclear-cytoplasmic trafficking of the Nipah virus matrix (NiV-M) protein and associated post-translational modification play a critical role in matrix-mediated virus budding. Nipah virus (NiV) is a highly pathogenic emerging paramyxovirus that causes fatal encephalitis in humans, and is classified as a Biosafety Level 4 (BSL4) pathogen. During live NiV infection, NiV-M was first detected in the nucleus at early stages of infection before subsequent localization to the cytoplasm and the plasma membrane. Mutations in the putative bipartite nuclear localization signal (NLS) and the leucine-rich nuclear export signal (NES) found in NiV-M impaired its nuclear-cytoplasmic trafficking and also abolished NiV-M budding. A highly conserved lysine residue in the NLS served dual functions: its positive charge was important for mediating nuclear import, and it was also a potential site for monoubiquitination which regulates nuclear export of the protein. Concordantly, overexpression of ubiquitin enhanced NiV-M budding whereas depletion of free ubiquitin in the cell (via proteasome inhibitors) resulted in nuclear retention of NiV-M and blocked viral budding. Live Nipah virus budding was exquisitely sensitive to proteasome inhibitors: bortezomib, an FDA-approved proteasome inhibitor for treating multiple myeloma, reduced viral titers with an IC(50) of 2.7 nM, which is 100-fold less than the peak plasma concentration that can be achieved in humans. This opens up the possibility of using an "off-the-shelf" therapeutic against acute NiV infection.