Purified budded virions of Autographa californica nuclear polyhedrosis virus (AcNPV) contain abundant amounts of free ubiquitin, which has an altered electrophoretic mobility on SDS gels as compared with standard ubiquitin. Phase extraction of virion proteins with Triton X-114 indicated that the modified form of ubiquitin behaved as an integral membrane protein. The membrane-bound form of ubiquitin was labeled with both phosphate and palmitate, and its electrophoretic mobility was altered by treatment with phospholipase A2 and a phosphatidylcholine-specific phospholipase D. Mild trypsin digestion indicated that the acyl group was not linked to the C-terminus of the protein. Acylated ubiquitin could not be radiolabeled with a membrane-impermeable Bolton-Hunter reagent unless virus was pretreated with detergent. Together, these experiments suggest that ubiquitin is attached to the inner face of the viral membrane by a novel type of phospholipid anchor.