The peribacteroid membrane (PBM) in legume root nodules is derived from plasma membrane following endocytosis of Rhizobium by fusion of newly synthesized vesicles. We studied the roles of plant Rab1p and Rab7p homologs, the small GTP-binding proteins involved in vesicular transport, in the biogenesis of the PBM. Three cDNAs encoding legume homologs of mammalian Rab1p and Rab7p were isolated from soybean (sRab1p, sRab7p) and Vigna aconitifolia (vRab7p). sRab1p was confirmed to be a functional counterpart of yeast Ypt1p (Rab1p) by complementation of a yeast ypt1-1 mutant. Both srab1 and vrab7 genes are induced during nodulation with the level of vrab7 mRNA being 12 times higher than that in root meristem and leaves. This induction directly correlates with membrane proliferation in nodules. Antisense constructs of srab1 and vrab7, under a nodule-specific promoter (leghemoglobin, Lbc3), were made in a binary vector and transgenic nodules were developed on soybean hairy roots obtained through Agrobacterium rhizogenes-mediated transformation. Both antisense srab1 and vrab7 nodules were smaller in size and showed lower nitrogenase activity than controls. The antisense srab1 nodules showed lack of expansion of infected cells, fewer bacteroids per cell and their frequent release into vacuoles. In contrast, antisense vrab7 expressing nodules showed accumulation of late endosomal structure and multivesicular bodies in the perinuclear region. These data suggest that both Rab1p and Rab7p are essential for the development of the PBM compartment in effective symbiosis.