To study VSV entry and the fate of incoming matrix (M) protein during virus uncoating we used recombinant viruses encoding M proteins with a C-terminal tetracysteine tag that could be fluorescently labeled using biarsenical (Lumio) compounds. We found that uncoating occurs early in the endocytic pathway and is inhibited by expression of dominant-negative (DN) Rab5, but is not inhibited by DN-Rab7 or DN-Rab11. Uncoating, as defined by the separation of nucleocapsids from M protein, occurred between 15 and 20 minutes post-entry and did not require microtubules or an intact actin cytoskeleton. Unexpectedly, the bulk of M protein remained associated with endosomal membranes after uncoating and was eventually trafficked to recycling endosomes. Another small, but significant fraction of M distributed to nuclear pore complexes, which was also not dependent on microtubules or polymerized actin. Quantification of fluorescence from high-resolution confocal micrographs indicated that after membrane fusion, M protein diffuses across the endosomal membrane with a concomitant increase in fluorescence from the Lumio label which occurred soon after the release of RNPs into the cytoplasm. These data support a new model for VSV uncoating in which RNPs are released from M which remains bound to the endosomal membrane rather than the dissociation of M protein from RNPs after release of the complex into the cytoplasm following membrane fusion.