The structural protein mu 1 of mammalian reoviruses was noted to have a potential N-myristoylation sequence at the amino terminus of its deduced amino acid sequence. Virions labeled with [3H]myristic acid were used to demonstrate that mu 1 is modified by an amide-linked myristoyl group. A myristoylated peptide having a relative molecular weight (Mr) of approximately 4,000 was also shown to be a structural component of virions and was concluded to represent the 4.2-kDa amino-terminal fragment of mu 1 which is generated by the same proteolytic cleavage that yields the carboxy-terminal fragment and major outer capsid protein mu 1C. The myristoylated 4,000-Mr peptide was found to be present in reovirus intermediate subviral particles but to be absent from cores, indicating that it is a component of the outer capsid. A distinct large myristoylated fragment of the intact mu 1 protein was also identified in intermediate subviral particles, but no myristoylated mu-region proteins were identified in cores, consistent with the location of mu 1 in the outer capsid. Similarities between amino-terminal regions of the reovirus mu 1 protein and the poliovirus capsid polyprotein were noted. By analogy with other viruses that contain N-myristoylated structural proteins (particularly picornaviruses), we suggest that the myristoyl group attached to mu 1 and its amino-terminal fragments has an essential role in the assembly and structure of the reovirus outer capsid and in the process of reovirus entry into cells.