Membrane fusion plays a key role in many biological processes including vesicle trafficking, synaptic transmission, fertilization or cell entry of enveloped viruses. As a common feature the fusion process is mediated by distinct membrane proteins. We describe here ‘Fusoselect’, a universal procedure allowing the identification and engineering of molecular determinants for cell–cell fusion-activity by directed evolution. The system couples cell–cell fusion with the release of retroviral particles, but can principally be applied to membrane proteins of non-viral origin as well. As a model system, we chose a γ-retroviral envelope protein, which naturally becomes fusion-active through proteolytic processing by the viral protease. The selection process evolved variants that, in contrast to the parental protein, mediated cell–cell fusion in absence of the viral protease. Detailed analysis of the variants revealed molecular determinants for fusion competence in the cytoplasmic tail (CT) of retroviral Env proteins and demonstrated the power of Fusoselect.