ABSTRACT Alphaviruses are small enveloped RNA viruses with highly organized structures that exclude host cell proteins. They contain an internal nucleocapsid and an external lattice of the viral E2 and E1 transmembrane proteins. Alphaviruses bud from the plasma membrane (PM), but the process and dynamics of alphavirus assembly and budding are poorly understood. Here we generated Sindbis viruses (SINVs) with fluorescent protein labels on the E2 envelope protein and exploited them to characterize virus assembly and budding in living cells. During virus infection, E2 became enriched in localized patches on the PM and in filopodium-like extensions. These E2-labeled patches and extensions contained all of the viral structural proteins. Correlative light and electron microscopy studies established that the patches and extensions colocalized with virus budding structures, while light microscopy showed that they excluded a freely diffusing PM marker protein. Exclusion required the interaction of the E2 protein with the capsid protein, a critical step in virus budding, and was associated with the immobilization of the envelope proteins on the cell surface. Virus infection induced two distinct types of extensions: tubulin-negative extensions that were ∼2 to 4 μm in length and excluded the PM marker, and tubulin-positive extensions that were >10 μm long, contained the PM marker, and could transfer virus particles to noninfected cells. Tubulin-positive extensions were selectively reduced in cells infected with a nonbudding SINV mutant. Together, our data support a model in which alphavirus infection induces reorganization of the PM and cytoskeleton, leading to virus budding from specialized sites. IMPORTANCE Alphaviruses are important and widely distributed human pathogens for which vaccines and antiviral therapies are urgently needed. These small highly organized viruses bud from the host cell PM. Virus assembly and budding are critical but little understood steps in the alphavirus life cycle. We developed alphaviruses with fluorescent protein tags on one of the viral membrane (envelope) proteins and used a variety of microscopy techniques to follow the envelope protein and a host cell PM protein during budding. We showed that alphavirus infection induced the formation of patches and extensions on the PM where the envelope proteins accumulate. These sites excluded other PM proteins and correlated with virus budding structures. Exclusion of PM proteins required specific interactions of the viral envelope proteins with the internal capsid protein. Together, our data indicate that alphaviruses extensively reorganize the cell surface and cytoskeleton to promote their assembly and budding.