Mouse hepatitis coronavirus (MHV) buds into pleomorphic membrane structures with features expected of the intermediate compartment between the ER and the Golgi complex. Here, we characterize the MHV budding compartment in more detail in mouse L cells using streptolysin O (SLO) permeabilization which allowed us to better visualize the membrane structures at the ER-Golgi boundary. The MHV budding compartment shares membrane continuities with the rough ER as well as with cisternal elements on one side of the Golgi stack. It also labeled with p58 and rab2, two markers of the intermediate compartment, and with PDI, usually considered to be a marker of the rough ER. The membranes of the budding compartment, as well as the budding virions themselves, but not the rough ER, labeled with the N-acetyl-galactosamine (GalNAc)-specific lectin Helix pomatia. When the SLO-permeabilized cells were treated with guanosine 5'-(3-O-thio)triphosphate (GTP gamma S), the budding compartment accumulated a large number of beta-cop-containing buds and vesicular profiles. Complementary biochemical experiments were carried out to determine whether vesicular transport was required for the newly synthesized M protein, that contains only O-linked oligosaccharides, to acquire first, GalNAc and second, the Golgi modifications galactose and sialic acid. The results from both in vivo studies and from the use of SLO-permeabilized cells showed that, while GalNAc addition occurred under conditions which block vesicular transport, both cytosol and ATP were prerequisites for the M protein oligosaccharides to acquire Golgi modifications. Collectively, our data argue that transport from the rough ER to the Golgi complex requires only one vesicular transport step and that the intermediate compartment is a specialized domain of the endoplasmatic reticulum that extends to the first cisterna on the cis side of the Golgi stack.