Intracellular capsid transport and release of Mason-Pfizer monkey virus are dependent on myristylation of the Gag matrix domain (MA). A myristylated MA mutant, in which Thr41 and Thr78 are replaced with isoleucines, assembles capsids that are transported to the plasma membrane but are blocked in an early budding step. Since the nuclear magnetic resonance structure of MA showed that these Thr residues point into the hydrophobic core of the protein, it was hypothesized that the T41I/T78I mutant was defective in release of myristic acid from the more hydrophobic core. In order to further investigate whether an increase in the hydrophobicity of the MA core modulates capsid-membrane interactions and viral budding, three tyrosine residues (11, 28, and 67), oriented toward the MA core, were replaced individually or in a pair-wise combination with the more hydrophobic phenylalanine residue(s). As a control, Tyr82, oriented toward the outer surface of MA, was also replaced with phenylalanine. These Tyr-to-Phe substitutions did not alter capsid assembly compared to wild type in a capsid assembly assay. Pulse-chase, immunofluorescence, and electron microscopy studies demonstrated that single substitutions of Tyr11, Tyr28, and Tyr67 recapitulated the T41I/T78I mutant phenotype of decreased budding kinetics and accumulation of capsids at the plasma membrane. MA double mutants with a combination of these Tyr substitutions exhibited a phenotype that was even more defective in budding. In contrast, MA mutants with Tyr82 replaced by Phe resulted in a transport-defective phenotype. These results strongly support the hypothesis that myristic acid is sequestered inside MA prior to capsid-membrane interactions.