In vitro synthesis of endoplasmic reticulum-derived transpofl vesicles has been reconstituted with washed membranes and three soluble proteins (Sarl p, Secl3p complex, and Sec23p complex). Vesicle formation requires GTP but can be driven by nonhydrolyzable analogs such as GMP-PNP. However, GMP-PNP vesicles fail to target and fuse with the Golgi complex whereas GTP vesicles are functional. All the cytosolic proteins required for vesicle formation are retained on GMPPNP vesicles, while Sarlp dissociates from GTP vesicles. Thin section electron microscopy of purified preparations reveals a uniform population of 60-65 nm vesicles with a 10 nm thick electron dense coat. The subunits of this novel coat complex are molecularly distinct from the constituents of the nonclathrin coatomer involved in intra-Golgi transport. Because the overall cycle of budding driven by these two types of coats appears mechanistically similar, we propose that the coat structures be called COPI and COPII.