Processing of HIV and SIV envelope oligosaccharides is critical for proper intracellular trafficking and function. An inhibitor of α-glucosidases I and 11, N-butyl deoxynojirimycin (N-BuDNJ), retards HIV-1 and SIVmac spread in lymphocytes and monocytes by diminishing virus infectivity, and also causes a reduction in syncytia formation between infected cells and uninfected lymphocytes. N-BuDNJ retards envelope processing from the precursor form to the mature surface (SU) and transmembrane proteins in HIV-1- and SIVmac-infected cells, as well as in cells infected with vaccinia-HIV-1 envelope recombinant virus. However, no significant reduction is seen in the amount of SU in released virus particles, though the virus particle-associated SU from N-BuDNJ-treated cells has an altered electrophoretic mobility. In contrast, N-BuDNJ had no effect on GAG protein synthesis and processing. These findings demonstrate a critical requirement for oligosaccharide processing by α-glucosidases I and It for HIV-1 and SIVmac envelope processing and fusogenicity.