Temperature-sensitive mutations in the SEC16 gene of Saccharomyces cerevisiae block budding of transport vesicles from the ER. SEC16 was cloned by complementation of the sec16-1 mutation and encodes a 240-kD protein located in the insoluble, particulate component of cell lysates. Sec16p is released from this particulate fraction by high salt, but not by nonionic detergents or urea. Some Sec16p is localized to the ER by immunofluorescence microscopy. Membrane-associated Sec16p is incorporated into transport vesicles derived from the ER that are formed in an in vitro vesicle budding reaction. Sec16p binds to Sec23p, a COPII vesicle coat protein, as shown by the two-hybrid interaction assay and affinity studies in cell extracts. These findings indicate that Sec16p associates with Sec23p as part of the transport vesicle coat structure. Genetic analysis of SEC16 identifies three functionally distinguishable domains. One domain is defined by the five temperature-sensitive mutations clustered in the middle of SEC16. Each of these mutations can be complemented by the central domain of SEC16 expressed alone. The stoichiometry of Sec16p is critical for secretory function since overexpression of Sec16p causes a lethal secretion defect. This lethal function maps to the NH2-terminus of the protein, defining a second functional domain. A separate function for the COOH-terminal domain of Sec16p is shown by its ability to bind Sec23p. Together, these results suggest that Sec16p engages in multiple protein-protein interactions both on the ER membrane and as part of the coat of a completed vesicle.