The Tf1 element of Schizosaccharomyces pombe is a long terminal repeat-containing retrotransposon that encodes functional protease, reverse transcriptase, and integrase proteins. Although these proteins are known to be necessary for protein processing, reverse transcription, and integration, respectively, the function of the protein thought to be Gag has not been determined. We present here the first electron microscopy of Tf1 particles. We tested whether the putative Gag of Tf1 was required for particle formation, packaging of RNA, and reverse transcription. We generated deletions of 10 amino acids in each of the four hydrophilic domains of the protein and found that all four mutations reduced transposition activity. The N-terminal deletion removed a nuclear localization signal and inhibited nuclear import of the transposon. The two mutations in the center of Gag destabilized the protein and resulted in no virus-like particles. The C-terminal deletion caused a defect in RNA packaging and, as a result, low levels of cDNA. The electron microscopy of cells expressing a truncated Tf1 showed that Gag alone was sufficient for the formation of virus-like particles. Taken together, these results indicate that Tf1 encodes a Gag protein that is a functional equivalent of the Gag proteins of retroviruses.