Interaction of viral envelope proteins with host cell membranes has been extensively investigated in a number of systems. However, the biological relevance of these interactions in vivo has been hampered by the absence of adequate animal models. Reverse genetics using the bovine leukemia virus (BLV) genome highlighted important functional domains of the envelope protein involved in the viral life cycle. For example, immunoreceptor tyrosine-based activation motifs (ITAM) of the envelope transmembrane protein (TM) are essential determinants of infection. Although cell fusion directed by the aminoterminal end of TM is postulated to be essential, some proviruses expressing fusion-deficient envelope proteins unexpectedly replicate at wild-type levels. Surprisingly also, a conserved N-linked glycosylation site of the extracellular envelope protein (SU) inhibits cell-to-cell transmission suggesting that infectious potential has been limited during evolution. In this review, we summarize the knowledge pertaining to the BLV envelope protein in the context of viral infection, replication and pathogenesis.