The molecular biology of spuma or foamy retroviruses is different from that of the other members of the Retroviridae. Among the distinguishing features, the N-terminal domain of the foamy virus Env glycoprotein, the 16-kDa Env leader protein Elp, is a component of released, infectious virions and is required for particle budding. The transmembrane protein Elp specifically interacts with N-terminal Gag sequences during morphogenesis. In this study, we investigate the mechanism of Elp release from the Env precursor protein. By a combination of genetic, biochemical, and biophysical methods, we show that the feline foamy virus (FFV) Elp is released by a cellular furin-like protease, most likely furin itself, generating an Elp protein consisting of 127 amino acid residues. The cleavage site fully conforms to the rules for an optimal furin site. Proteolytic processing at the furin cleavage site is required for full infectivity of FFV. However, utilization of other furin proteases and/or cleavage at a suboptimal signal peptidase cleavage site can partially rescue virus viability. In addition, we show that FFV Elp carries an N-linked oligosaccharide that is not conserved among the known foamy viruses.