Infectious bursal disease virus (IBDV) capsids are formed by a single protein layer containing three polypeptides, pVP2, VP2, and VP3. Here, we show that the VP3 protein synthesized in insect cells, either after expression of the complete polyprotein or from a VP3 gene construct, is proteolytically degraded, leading to the accumulation of product lacking the 13 C-terminal residues. This finding led to identification of the VP3 oligomerization domain within a 24-amino-acid stretch near the C-terminal end of the polypeptide, partially overlapping the VP1 binding domain. Inactivation of the VP3 oligomerization domain, by either proteolysis or deletion of the polyprotein gene, abolishes viruslike particle formation. Formation of VP3-VP1 complexes in cells infected with a dual recombinant baculovirus simultaneously expressing the polyprotein and VP1 prevented VP3 proteolysis and led to efficient virus-like particle formation in insect cells.