The paramyxovirus, simian virus 5, fusion (F) protein contains seven amino acids between heptad repeat B (a domain required for a biologically active fusion protein) and the presumptive boundary of the transmembrane (TM) domain. The role of the seven membrane proximal residues in stability and fusion promotion was examined by construction of a series of insertion, substitution, and deletion mutants, as manipulation of this region to enable proteolytic cleavage would facilitate production of a soluble F protein. The majority of the mutant F proteins both oligomerized and had kinetics of intracellular transport similar to those of wild-type (wt) F protein. All mutant F proteins were expressed at the cell surface at or near the same level as the wt F protein. However, by using both a qualitative lipid mixing assay and a quantitative content mixing assay for membrane fusion, it was found that mutant F proteins containing insertions in the region between heptad repeat B and the TM domain were unable to induce fusion, whereas the mutant F proteins containing substitutions in this region, together with three of the four mutants with deletions in this region, could induce fusion. Four of the F protein mutants contained a Factor Xa cleavage site, IEGR; however, Factor Xa treatment of cell surfaces released either none or only very small amounts (< 1% of total protein) of the soluble heterodimer F1 + F2. As an alternative method of generating soluble F protein, a glycosyl phosphatidylinositol (GPI) anchor was added to the F protein at three membrane-proximal positions. The highest level of surface expression was observed when the final molecule did not contain a significant insertion of amino acids into the membrane proximal region. Two F-GPI mutants reached the surface at approximately 20% of the levels seen with the wt F protein, and approximately 25% of the cell surface population of these mutants could be cleaved with phosphatidylinositol phospholipase C (PI-PLC) to yield soluble F protein. However, all the F-GPI mutants oligomerized aberrantly and failed to promote fusion. Taken together, these data indicate that the spacing of the region immediately adjacent to the presumptive boundary of the TM domain is extremely important for the fusogenic activity of the SV5 F protein.