APOBEC3 proteins are important for antiretroviral defense in mammals. The activity of these factors has been well characterized in vitro, identifying cytidine deamination as an active source of viral restriction leading to hypermutation of viral DNA synthesized during reverse transcription. These mutations can result in viral lethality via disruption of critical genes, but in some cases is insufficient to completely obstruct viral replication. This sublethal level of mutagenesis could aid in viral evolution. A cytidine deaminase-independent mechanism of restriction has also been identified, as catalytically inactive proteins are still able to inhibit infection in vitro. Murine retroviruses do not exhibit characteristics of hypermutation by mouse APOBEC3 in vivo. However, human APOBEC3G protein expressed in transgenic mice maintains antiviral restriction and actively deaminates viral genomes. The mechanism by which endogenous APOBEC3 proteins function is unclear. The mouse provides a system amenable to studying the interaction of APOBEC3 and retroviral targets in vivo. Virions packaging endogenous protein were isolated from mice for analysis of APOBEC3 without a need for protein overexpression. Biochemical and molecular studies are possible using endogenous protein and viral nucleic acids. Additionally, the effect of APOBEC3-mediated viral mutagenesis and subsequent drug resistance can be modeled in this system. Human APOBEC3G transgenic mice infected with murine retroviruses and treated with an antiretroviral drug allows examination of natural levels of viral replication, APOBEC3 induced hypermutation, and potential viral escape. Studies described herein explore mechanisms of APOBEC3-mediated restriction and drug resistance in vivo. We show that endogenous APOBEC3 protein is efficiently packaged into viral cores, and this protein maintains catalytic activity against artificial substrates. We recovered low levels of G-to-A mutations from natural reverse transcription products, although approximately five to ten fold lower than that thought to be necessary for efficient viral restriction. We show that inhibition of reverse transcription is the main mechanism of restriction in vivo, and can be targeted through virion-packaged or cell-associated protein. Transgenically-expressed human APOBEC3G is instead able to heavily deaminate viral DNA, although frequently to sublethal levels. We assessed the effect of both murine APOBEC3 and APOBEC3G on viral replication in the presence and absence of an antiretroviral drug, and examined viruses for drug resistance mutations. APOBEC3G has a clear effect on the rate of viral mutagenesis in vivo, with the potential to induce drug resistance mutations.