Upon addition of GTPgammaS to in vitro budding reactions, COP I vesicles form but retain their coat, making them easy to isolate and analyze. We have developed an in vitro budding assay that reconstitutes the formation of COP I-derived vesicles under conditions where GTP hydrolysis can occur. Once formed, vesicles are uncoated and appear functional as they fuse readily with acceptor membranes. Electron microscopy shows a homogeneous population of uncoated vesicles that contain the medial/trans Golgi enzyme alpha1, 2-mannosidase II. Biochemical quantitation of vesicles reveals that resident Golgi enzymes are up to 10-fold more concentrated than in donor membranes, but vesicles formed in the presence of GTPgammaS show an average density of resident Golgi enzymes similar to that seen in donor membranes. We show that the sorting process is mediated by the small GTPase arf-1 as addition of a dominant, hydrolysis-deficient arf-1 (Q)71(L) mutant produced results similar to that of GTPgammaS. Strikingly, the average density of the anterograde cargo protein, polymeric IgA receptor, in COP I-derived vesicles was similar to that found in starting membranes and was independent of GTP hydrolysis. We conclude that hydrolysis of GTP bound to arf-1 promotes selective segregation and concentration of Golgi resident enzymes into COP I vesicles.