Intracytoplasmic protein targeting in mammalian cells is critical for organelle function as well as virus assembly, but the signals that mediate it are poorly defined. We show here that Mason-Pfizer monkey virus specifically targets Gag precursor proteins to the pericentriolar region of the cytoplasm in a microtubule dependent process through interactions between a short peptide signal, known as the cytoplasmic targeting-retention signal, and the dynein/dynactin motor complex. The Gag molecules are concentrated in pericentriolar microdomains, where they assemble to form immature capsids. Depletion of Gag from this region by cycloheximide treatment, coupled with the presence of ribosomal clusters that are in close vicinity to the assembling capsids, suggests that the dominant N-terminal cytoplasmic targeting-retention signal functions in a cotranslational manner. Transport of the capsids out of the pericentriolar assembly site requires the env-gene product, and a functional vesicular transport system. A single point mutation that renders the cytoplasmic targeting-retention signal defective abrogates pericentriolar targeting of Gag molecules. Thus the previously defined cytoplasmic targeting-retention signal appears to act as a cotranslational intracellular targeting signal that concentrates Gag proteins at the centriole for assembly of capsids.