The 144-kDa lambda2 protein is a structural component of mammalian reovirus particles and contains the guanylyltransferase activity involved in adding 5' caps to reovirus mRNAs. After incubation of reovirus T3D core particles at 52 degrees C, the lambda2 protein became sensitive to partial protease degradation. Sequential treatments with heat and chymotrypsin caused degradation of a C-terminal portion of lambda2, leaving a 120K core-associated fragment. The four other proteins in cores--lambda1, lambda3, mu2, and sigma2--were not affected by the treatment. Purified cores with cleaved lambda2 were subjected to transmission cryoelectron microscopy and image reconstruction. Reconstruction analysis demonstrated that a distinctive outer region of lambda2 was missing from the modified cores. The degraded region of lambda2 corresponded to the one that contacts the base of the sigma1 protein fiber in reovirus virions and infectious subvirion particles, suggesting that the sigma1-binding region of lambda2 is near its C terminus. Cores with cleaved lambda2 were shown to retain all activities required to transcribe and cap reovirus mRNAs, indicating that the C-terminal region of lambda2 is dispensable for those functions.