Clathrin-coated vesicles were the first discovered and remain the most extensively characterized transport vesicles. They mediate endocytosis of transmembrane receptors and transport of newly synthesized lysosomal hydrolases from the trans-Golgi network to the lysosome. Cell-free assays for coat assembly, membrane binding, and coated vesicle budding have provided detailed functional and structural information about how the major coat constituents, clathrin and the adaptor protein complexes, interact with each other, with membranes, and with the sorting signals found on cargo molecules. Coat constituents not only serve to shape the budding vesicle, but also play a direct role in the packaging of cargo, suggesting that protein sorting and vesicle budding are functionally integrated. The functional interplay between the coated vesicle machinery and its cargo could ensure sorting fidelity and packaging efficiency and might enable modulation of vesicular trafficking in response to demand.