Retroviral Gag proteins are membrane-bound polyproteins that are necessary and sufficient for virus-like particle (VLP) formation. It is not known how Gag traffics through the cell or how the site of particle production is determined. Here we use two techniques, biarsenical/tetracysteine (TC) labeling and release from a cycloheximide block, to follow the trafficking of newly synthesized HIV-1 Gag. Gag first appears diffusely distributed in the cytosol, accumulates in perinuclear clusters, passes transiently through a multivesicular body (MVB)-like compartment, and then travels to the plasma membrane (PM). Sequential passage of Gag through these temporal intermediates was confirmed by live cell imaging. Induction of a transient rise in cytoplasmic calcium increased the amounts of Gag, Gag assembly intermediates and VLPs in MVBs, and resulted in a dramatic increase in VLP release. These results define an intracellular trafficking pathway for HIV-1 Gag that uses perinuclear compartments and the MVB as trafficking intermediates. We propose that the regulation of Gag association with MVB-like compartments regulates the site of HIV-1 budding and particle formation.