The MAK3 gene is necessary for propagation of the L-A double-stranded RNA virus of Saccharomyces cerevisiae. MAK3 encodes a protein with substantial homology to the Escherichia coli rimI N-acetyltransferase that acetylates the NH2 terminus of ribosomal protein S18, and shares consensus sequences with a group of N-acetyltransferases. The NH2 terminus of the viral major coat protein encoded by L-A is normally blocked, but we find that it is unblocked in a mak3-1 mutant. L-A virus-encoded proteins produced from a cDNA clone of L-A can encapsidate the L-A (+)-strands in a wild-type host, but not in a mak3-1 mutant strain. The amount of major coat protein found in the particle fraction is reduced greater than 100-fold, and the amount in the total cell extract is reduced 5-10-fold. A modified beta-galactosidase, having as its NH2-terminal the NH2-terminal 13 residues of the L-A-encoded major coat protein, is blocked in a wild-type host, but not in a mak3-1 host. We propose that MAK3 encodes an N-acetyltransferase whose modification of the L-A major coat protein NH2 terminus is essential for viral assembly, and that unassembled coat protein is unstable.