Retrovirus assembly and budding involve a highly dynamic and concerted interaction of viral and cellular proteins. Previous studies have shown that retroviral Gag proteins interact with actin filaments, but the significance of these interactions remains to be defined. Using equine infectious anemia virus (EIAV), we now demonstrate differential effects of cellular actin dynamics at distinct stages of retrovirus assembly and budding. First, virion production was reduced when EIAV-infected cells were treated with phallacidin, a cell-permeable reagent that stabilizes actin filaments by slowing down their depolymerization. Confocal microscopy confirmed that the inhibition of EIAV production correlated temporally over several days with the incorporation dynamics of phallacidin into the actin cytoskeleton. Although the overall structure of the actin cytoskeleton and expression of viral protein appeared to be unaffected, phallacidin treatment dramatically reduced the amount of full-length Gag protein associated with the actin cytoskeleton. These data suggest that an association of full-length Gag proteins with de novo actin filaments might contribute to Gag assembly and budding. On the other hand, virion production was enhanced when EIAV-infected cells were incubated briefly (2 h) with the actin-depolymerizing drugs cytochalasin D and latrunculin B. Interestingly, the enhanced virion production induced by cytochalasin D required a functional late (L) domain, either the EIAV YPDL L-domain or the proline-rich L domains derived from human immunodeficiency virus type 1 or Rous sarcoma virus, respectively. Thus, depolymerization of actin filaments may be a common function mediated by retrovirus L domains during late stages of viral budding. Taken together, these observations indicate that dynamic actin polymerization and depolymerization may be associated with different stages of viral production.