The relationship of protein glycosylation to compartmentalization and processing of mouse mammary tumor virus (MTV) glycoproteins has been examined in M1.54, a cloned line of MTV-infected rat hepatoma tissue culture cells. Previous work established that full maturation of MTV glycoproteins in this cell line requires dexamethasone, a synthetic glucocorticoid (Firestone, G. L., Payvar, F., and Yamamoto, K. R. (1982) Nature (Lond.) 300, 221-225). The ability to regulate production of the full complement of five mature membrane-associated and secreted viral glycoproteins from one initially synthesized precursor has been used to advantage in the present work. At concentrations of tunicamycin that specifically inhibit N-linked protein glycosylation, incorporation of [35S]methionine into total cellular and secreted protein is not detectably affected, MTV-specific mRNAs are produced normally, and the nonglycosylated form of the glycosylated viral precursor polyprotein accumulates within the cells. However, tunicamycin inhibits the site-specific cleavage of the glycosylated polyprotein and distribution of MTV polypeptides to the cell surface and extracellular fractions. Thus, when tunicamycin-treated cultures of M1.54 are exposed to dexamethasone and [35S]methionine, no labeled viral antigens are detected in the culture medium. Similarly, tunicamycin prevents the appearance of membrane-associated viral antigens that can be labeled externally by lactoperoxidase-mediated iodination and it protects the cells against the cytolytic effects of MTV-specific antiserum and complement. Taken together, these results are consistent with the view that while glycosylation of some proteins may be unessential for their compartmentalization and processing, it does appear to be correlated with proper maturation of others. The hormone-dependent maturation of MTV glycoproteins in M1.54 may be particularly useful for study of this latter class since glycosylation is stringently associated with their compartmentalization and cleavage.