We have investigated the underlying mechanism by which direct cell-cell contact enhances the efficiency of cell-to-cell transmission of retroviruses. Applying 4D imaging to a model retrovirus, the murine leukemia virus, we directly monitor and quantify sequential assembly, release, and transmission events for individual viral particles as they happen in living cells. We demonstrate that de novo assembly is highly polarized towards zones of cell-cell contact. Viruses assembled approximately 10-fold more frequently at zones of cell contact with no change in assembly kinetics. Gag proteins were drawn to adhesive zones formed by viral Env glycoprotein and its cognate receptor to promote virus assembly at cell-cell contact. This process was dependent on the cytoplasmic tail of viral Env. Env lacking the cytoplasmic tail while still allowing for contact formation, failed to direct virus assembly towards contact sites. Our data describe a novel role for the viral Env glycoprotein in establishing cell-cell adhesion and polarization of assembly prior to becoming a fusion protein to allow virus entry into cells.