We have recently shown that the matrix protein M of Borna disease virus (BDV) copurifies with the affinity-purified nucleoprotein (N) from BDV-infected cells, suggesting that M is an integral component of the viral ribonucleoprotein complex (RNP). However, further studies were hampered by the lack of appropriate tools. Here we generated an M-specific rabbit polyclonal antiserum to investigate the intracellular distribution of M as well as its colocalization with other viral proteins in BDV-infected cells. Immunofluorescence analysis revealed that M is located both in the cytoplasm and in nuclear punctate structures typical for BDV infection. Colocalization studies indicated an association of M with nucleocapsid proteins in these nuclear punctate structures. In situ hybridization analysis revealed that M also colocalizes with the viral genome, implying that M associates directly with viral RNPs. Biochemical studies demonstrated that M binds specifically to the phosphoprotein P but not to N. Binding of M to P involves the N terminus of P and is independent of the ability of P to oligomerize. Surprisingly, despite P-M complex formation, BDV polymerase activity was not inhibited but rather slightly elevated by M, as revealed in a minireplicon assay. Thus, unlike M proteins of other negative-strand RNA viruses, BDV-M seems to be an integral component of the RNPs without interfering with the viral polymerase activity. We propose that this unique feature of BDV-M is a prerequisite for the establishment of BDV persistence.