Immunogold electron microscopy and analysis were used to determine the organization of the major structural proteins of vesicular stomatitis virus (VSV) during virus assembly. We determined that matrix protein (M protein) partitions into plasma membrane microdomains in VSV-infected cells as well as in transfected cells expressing M protein. The sizes of the M-protein-containing microdomains outside the virus budding sites (50 to 100 nm) were smaller than those at sites of virus budding (approximately 560 nm). Glycoprotein (G protein) and M protein microdomains were not colocalized in the plasma membrane outside the virus budding sites, nor was M protein colocalized with microdomains containing the host protein CD4, which efficiently forms pseudotypes with VSV envelopes. These results suggest that separate membrane microdomains containing either viral or host proteins cluster or merge to form virus budding sites. We also determined whether G protein or M protein was colocalized with VSV nucleocapsid protein (N protein) outside the budding sites. Viral nucleocapsids were observed to cluster in regions of the cytoplasm close to the plasma membrane. Membrane-associated N protein was colocalized with G protein in regions of plasma membrane of approximately 600 nm. In contrast to the case for G protein, M protein was not colocalized with these areas of nucleocapsid accumulation. These results suggest a new model of virus assembly in which an interaction of VSV nucleocapsids with G-protein-containing microdomains is a precursor to the formation of viral budding sites.