Microtubule nucleation from centrosomes involves a lockwasher-shaped protein complex containing gamma-tubulin, named the gamma-tubulin ring complex (gammaTuRC). Here we investigate the mechanism by which the gammaTuRC nucleates microtubules, using a direct labelling method to visualize the behaviour of individual gammaTuRCs. A fluorescently-labelled version of the gammaTuRC binds to the minus ends of microtubules nucleated in vitro. Both gammaTuRC-mediated nucleation and binding of the gammaTuRC to preformed microtubules block further minus-end growth and prevent microtubule depolymerization. The gammaTuRC therefore acts as a minus-end-capping protein, as confirmed by electron-microscopic examination of gold-labelled gammaTuRCs. These data support a nucleation model for gammaTuRC function that involves capping of microtubules.