Rab1 is a small GTPase regulating vesicular traffic between early compartments of the secretory pathway. To explore the role of rab1 we have analyzed the function of a mutant (rab1a[S25N]) containing a substitution which perturbs Mg2+ coordination and reduces the affinity for GTP, resulting in a form which is likely to be restricted to the GDP-bound state. The rab1a(S25N) mutant led to a marked reduction in protein export from the ER in vivo and in vitro, indicating that a guanine nucleotide exchange protein (GEP) is critical for the recruitment of rab1 during vesicle budding. The mutant protein required posttranslational isoprenylation for inhibition and behaved as a competitive inhibitor of wild-type rab1 function. Both rab1a and rab1b (92% identity) were able to antagonize the inhibitory activity of the rab1a(S25N) mutant, suggesting that these two isoforms are functionally interchangeable. The rab1 mutant also inhibited transport between Golgi compartments and resulted in an apparent loss of the Golgi apparatus, suggesting that Golgi integrity is coupled to rab1 function in vesicular traffic.