The substrates for glycan synthesis in the lumen of the Golgi are nucleotide sugars that must be transported from the cytosol by specific membrane-bound transporters. The principal nucleotide sugar used for glycosylation in the Golgi of the yeast Saccharomyces cerevisiae is GDP-mannose, whose lumenal transport is mediated by the VRG4 gene product. As the sole provider of lumenal mannose, the Vrg4 protein functions as a key regulator of glycosylation in the yeast Golgi. We have undertaken a functional analysis of Vrg4p as a model for understanding nucleotide sugar transport in the Golgi. Here, we analyzed epitope-tagged alleles of VRG4. Gel filtration chromatography and co-immunoprecipitation experiments demonstrate that the Vrg4 protein forms homodimers with specificity and high affinity. Deletion analyses identified two regions essential for Vrg4p function. Mutant Vrg4 proteins lacking the predicted C-terminal membrane-spanning domain fail to assemble into oligomers (Abe, M., Hashimoto, H., and Yoda, K. (1999) FEBS Lett. 458, 309-312) and are unstable, while proteins lacking the N-terminal cytosolic tail are stable and multimerize efficiently, but are mislocalized to the endoplasmic reticulum (ER). Fusion of the N terminus of Vrg4p to related ER membrane proteins promote their transport to the Golgi, suggesting that sequences in the N terminus supply information for ER export. The dominant negative phenotype resulting from overexpression of truncated Vrg4-DeltaN proteins provides strong genetic evidence for homodimer formation in vivo. These studies are consistent with a model in which Vrg4p oligomerizes in the ER and is subsequently transported to the Golgi via a mechanism that involves positive sorting rather than passive default.