The GTPase Arf1 is considered as a molecular switch that regulates binding and release of coat proteins that polymerize on membranes to form transport vesicles. Here, we show that Arf1-GTP induces positive membrane curvature and find that the small GTPase can dimerize dependent on GTP. Investigating a possible link between Arf dimerization and curvature formation, we isolated an Arf1 mutant that cannot dimerize. Although it was capable of exerting the classical role of Arf1 as a coat receptor, it could not mediate the formation of COPI vesicles from Golgi-membranes and was lethal when expressed in yeast. Strikingly, this mutant was not able to deform membranes, suggesting that GTP-induced dimerization of Arf1 is a critical step inducing membrane curvature during the formation of coated vesicles.