Clathrin-coated vesicles mediate diverse processes such as nutrient uptake, downregulation of hormone receptors, formation of synaptic vesicles, virus entry, and transport of biosynthetic proteins to lysosomes. Cycles of coat assembly and disassembly are integral features of clathrin-mediated vesicular transport (Fig. 1a). Coat assembly involves recruitment of clathrin triskelia, adaptor complexes and other factors that influence coat assembly, cargo sequestration, membrane invagination and scission (Fig. 1a). Coat disassembly is thought to be essential for fusion of vesicles with target membranes and for recycling components of clathrin coats to the cytoplasm for further rounds of vesicle formation. In vitro, cytosolic heat-shock protein 70 (Hsp70) and the J-domain co-chaperone auxilin catalyse coat disassembly. However, a specific function of these factors in uncoating in vivo has not been demonstrated, leaving the physiological mechanism and significance of uncoating unclear. Here we report the identification and characterization of a Saccharomyces cerevisiae J-domain protein, Aux1. Inactivation of Aux1 results in accumulation of clathrin-coated vesicles, impaired cargo delivery, and an increased ratio of vesicle-associated to cytoplasmic clathrin. Our results demonstrate an in vivo uncoating function of a J domain co-chaperone and establish the physiological significance of uncoating in transport mediated by clathrin-coated vesicles.