The "Dsl1p complex" in Saccharomyces cerevisiae, consisting of Dsl1p and Tip20p, is involved in Golgi-ER retrograde transport and it is functionally conserved from yeast to mammalian cells. To further characterize this complex, we analyzed the function of Dsl3p, a protein that interacts with Dsl1p in yeast two hybrids screens. DSL3, recently identified in a genome wide analysis of essential genes as SEC39, encodes a cytosolic protein of 82 kDa that is peripherally associated with membranes derived from the ER. There is strong genetic interaction between DSL3 and other factors required for Golgi-ER retrograde transport. Size exclusion chromatography and affinity purification approaches confirmed that Dsl3p is associated with subunits of the "Dsl1p complex." The complex also includes the Q/t-SNARE proteins, Use1p, Sec20p, and Ufe1p, integral membrane proteins that constitute the trimeric acceptor for R/v-SNAREs on Golgi-derived vesicles at the ER. Using mutants, we performed a detailed analysis of interactions between subunits of the Dsl1p complex and the ER-localized SNARE proteins. This analysis showed that both Dsl1p and Dsl3p are required for the stable interaction of the SNARE Use1p with a central subcomplex consisting of Tip20p and the SNARE proteins Ufe1p and Sec20p.