The current strategy of targeting retroviral vector transduction by inserting a peptide ligand into the envelope protein has met with several obstacles. These modified proteins redirected vector binding to a new cognate receptor on a specific cell type but gave little or no gene transfer because they did not fuse the vector and target cell membranes. They dissociated readily from vectors and often required coassembly of wild-type envelope protein. Here we report a novel strategy to overcome the fusion and stability defects of modified retroviral envelope proteins. We inserted a prototypic ligand, the receptor binding domain of amphotropic murine leukemia virus, into an ecotropic murine leukemia virus envelope protein mutant containing glutamine 227-to-arginine plus aspartate 243-to-tyrosine substitutions. This modified protein increased transduction redirected to human cells expressing the amphotropic receptor to a level within 10-fold that of wild-type amphotropic virus, an increase of as great as 2000-fold over transduction by modified protein lacking the mutations. In addition to suppressing the fusion defect, these mutations unexpectedly stabilized the association of the modified protein with vector particles. Insertion of clinically relevant ligands into this envelope mutant should improve the efficiency and reliability of retroviral transduction of specific cell types for gene therapy applications.