VPS1 encodes a 79 kDa protein required for the proper sorting of soluble vacuolar proteins in Saccharomyces cerevisiae. The N-terminal half of Vps1p, which contains a consensus GTP-binding motif, shares extensive homology with a growing family of high molecular mass GTP-binding proteins. Members of this family have been implicated in a number of cellular processes. Vps1p most closely resembles the microtubule-associated protein dynamin. As predicted from the sequence, Vps1p binds and hydrolyses GTP. However, no requirement for microtubules was found for Vps1p function in protein sorting. In subcellular fractionation experiments Vps1p associates with the membrane fraction; the C-terminal half of Vps1p is important for this association. Mutational analysis of VPS1 generated two classes of mutations, dominant negative and recessive. The dominant mutations all mapped to the N-terminal half of the protein. Recessive mutations gave rise to either truncated or unstable proteins. A potential Vps1p-interacting protein (Mvp1p) has been isolated by screening for suppressors of the dominant alleles of VPS1. Taken together these results suggest that Vps1p is a two-domain protein that is part of a multi-subunit protein complex involved in vacuolar protein sorting.