SEC12 encodes an integral membrane glycoprotein essential for vesicle formation from the endoplasmic reticulum (ER) in yeast. The SAR1 gene was discovered as a multicopy suppressor of a sec12ts strain and encodes a 21-kDa GTP-binding protein also required for protein transport from the ER to the Golgi apparatus (Nakano, A., and Muramatsu, M. (1989) J. Cell Biol. 109, 2677-2691). We have purified Sar1p to apparent homogeneity from cells harboring a galactose-regulated recombinant SAR1. Purified Sar1p binds guanine nucleotides specifically and exhibits GTPase activity (0.001 min-1). Nucleotide exchange and hydrolysis rates are greatly increased in the presence of Mg2+ and nonionic detergents or phospholipids. An assay that measures the formation of a vesicle intermediate in ER to Golgi transport was devised that is dependent on the addition of purified Sar1p. This assay employs membranes prepared from wild-type cells and cytosol fractions depleted of Sar1p due to overproduction of Sec12p or by gel filtration chromatography. The gel-filtered cytosol requires the addition of Sar1p and GTP to support vesicle budding. Sar1p prebound with GTP gamma S inhibits Sar1p function in the vesicle formation assay. The results indicate a role for Sar1p in vesicle budding from the ER and suggest that GTP hydrolysis by Sar1p is required for this event.