By pulse-chase labeling with [35S]methionine and long-term labeling with 3H-sugars, the E1 glycoprotein of coronavirus MHV-A59 has been shown to acquire O-linked oligosaccharides in a two-step process. About 10 min after synthesis of the E1 protein, N-acetyl-galactosamine was added. This was followed approximately 10 min later by the addition of both galactose and sialic acid to give the mature oligosaccharides. This sequence of additions was confirmed by analyzing the 3H-labeled oligosaccharides bound to each of the E1 forms using gel filtration on P4 columns. The intracellular location of the first step was determined by exploiting the temperature sensitivity of virus release. The virus normally buds first into a smooth membrane compartment lying between the rough endoplasmic reticulum and the cis side of the Golgi stack (Tooze et al., 1984). At 31 degrees C the virus is assembled but does not appear to enter the Golgi stacks. The addition of N-acetyl-galactosamine is unaffected although the addition of galactose and sialic acid is inhibited. These results strongly suggest that addition of N-acetyl-galactosamine occurs in this budding compartment, the morphology of which is similar to that of transitional elements and vesicles.