Vps4p is an AAA-type ATPase required for efficient transport of biosynthetic and endocytic cargo from an endosome to the lysosome-like vacuole of Saccharomyces cerevisiae. Vps4p mutants that do not bind ATP or are defective in ATP hydrolysis were characterized both in vivo and in vitro. The nucleotide-free or ADP-bound form of Vps4p existed as a dimer, whereas in the ATP-locked state, Vps4p dimers assembled into a decameric complex. This suggests that ATP hydrolysis drives a cycle of association and dissociation of Vps4p dimers/decamers. Nucleotide binding also regulated the association of Vps4p with an endosomal compartment in vivo. This membrane association required the N-terminal coiled-coil motif of Vps4p, but deletion of the coiled-coil domain did not affect ATPase activity or oligomeric assembly of the protein. Membrane association of two previously uncharacterized class E Vps proteins, Vps24p and Vps32p/Snf7p, was also affected by mutations in VPS4. Upon inactivation of a temperature-conditional vps4 mutant, Vps24p and Vps32p/Snf7p rapidly accumulated in a large membrane-bound complex. Immunofluorescence indicated that both proteins function with Vps4p at a common endosomal compartment. Together, the data suggest that the Vps4 ATPase catalyzes the release (uncoating) of an endosomal membrane-associated class E protein complex(es) required for normal morphology and sorting activity of the endosome.