We have defined three categories of cultured cell lines on the basis of their permissiveness (susceptibility to initial infection) to mouse hepatitis virus (MHV). Fully permissive L-2 cells gave rise to 100-1000-fold higher numbers of infectious centers than did semi-permissive LM, LM-K or C-1300 cells, whereas non-permissive Vero or C-6 cells were refractory to MHV infection. On an infected cell basis, there was no deficiency on the part of semi-permissive cell lines to replicate total viral RNA, viral polypeptides or progeny virions. Two of the semi-permissive cell lines (LM and LM-K) supported persistent MHV infection, while a third (C-1300) succumbed to lytic infection. LM and LM-K cells, but not C-1300 cells showed resistance to MHV-induced membrane fusion, even when placed in contact with fusion-active MHV-infected L-2 cells. The ability of a given cell to undergo fusion did not correlate with membrane lipid characteristics (unsaturated fatty acid and sterol content) which contribute to membrane "fluidity". In order to more closely study the parameters of MHV-induced cell fusion, membranes were prepared from MHV-infected L-2 cells and monitored for their fusogenic potential with permissive L-2 cells, semi-permissive LM cells and non-permissive vero cells. Fusion was only observed with the permissive L-2 cells, and only when exogenous protease (trypsin or chymotrypsin) was added. When the membranes were prepared from 35S-methionine-labeled MHV-infected L-2 cells and subjected to protease treatment, the radiolabeled 180,000 dalton form of the E2-glycoprotein underwent proteolytic cleavage to yield a major product of approximately 90,000 daltons. Both trypsin and chymotrypsin were effective in this proteolytic cleavage and in activating membrane fusion. In a normally permissive, fusogenic infection of MHV in L-2 cells, the protease inhibitors TPCK and ZPCK, but not TLCK, were found to inhibit cell fusion. In MHV-infected L-2 cells, E2 was found almost exclusively as the 180,000 dalton form but turned over rapidly as shown by pulse-chase studies. TPCK and ZPCK but not TLCK inhibited turnover. The results suggest that L-2 cells contain a protease which cleaves at aromatic amino acids such as phenylalanine, and that this protease cleaves the 180,000 dalton form of the E2 to peptide fragments, one or more of which may activate cell fusion.