The transfer of sialic acids (Sia) from CMP-sialic acid (CMP-Sia) to N-linked sugar chains is thought to occur as a final step in their biosynthesis in the trans portion of the Golgi apparatus. In some cell types such Sia residues can have O-acetyl groups added to them. We demonstrate here that rat hepatocytes express 9-O-acetylated Sias mainly at the plasma membranes of both apical (bile canalicular) and basolateral (sinusoidal) domains. Golgi fractions also contain 9-O-acetylated Sias on similar N-linked glycoproteins, indicating that O-acetylation may take place in the Golgi. We show here that CMP-Sia-FITC (with a fluorescein group attached to the Sia) is taken up by isolated intact Golgi compartments. In these preparations, Sia-FITC is transferred to endogenous glycoprotein acceptors and can be immunochemically detected in situ. Addition of unlabeled UDP-Gal enhances Sia-FITC incorporation, indicating a substantial overlap of beta-galactosyltransferase and sialyltransferase machineries. Moreover, the same glycoproteins that incorporate Sia-FITC also accept [3H]galactose from the donor UDP-[3H]Gal. In contrast, we demonstrate with three different approaches (double-labeling, immunoelectron microscopy, and addition of a diffusible exogenous acceptor) that sialyltransferase and O-acetyltransferase machineries are much more separated from one another. Thus, 9-O-acetylation occurs after the last point of Sia addition in the trans-Golgi network. Indeed, we show that 9-O-acetylated sialoglycoproteins are preferentially segregated into a subset of vesicular carriers that concentrate membrane-bound, but not secretory, proteins.