We have defined a 160-nucleotide region, M psi, from the 5' leader region of the Rous sarcoma virus genome that is sufficient to direct the packaging of a heterologous RNA. M psi contains the putative O3 stem structure that has previously been shown, and that has been confirmed in this study, to be important for the efficient packaging of avian leukosis-sarcoma virus RNA. Analyses of several O3 stem mutants revealed that other regions within M psi can interfere with the proper folding of altered sequences which are predicted to form a wild-type O3 stem.