In both mammals and yeast, intracellular vesicular transport depends on the correct shuttling between membrane and cytosol of the Rab/Ypt small G proteins. Membrane association of these proteins requires prenylation by the Rab geranylgeranyl transferase that recognizes a complex formed by the Rab/Ypt protein and the Rab escort protein (REP). After prenylation the Rab/Ypt protein is delivered to the target membranes by REP. Little is known about the early steps of the Rab-REP complex formation and where this association occurs in the cell. Although prenylation is believed to take place in the cytosol, we show that the yeast Rab escort protein Mrs6 is present in both soluble and particulate fractions of cell extracts. Mrs6p is associated with the heavy microsomal fraction that contains endoplasmic reticulum-Golgi membranes but is absent in the plasma membrane, vacuoles, mitochondria, and microsomal subfraction associated with mitochondria. The solubilization pattern of the particulate pool of Mrs6p implies that this protein is peripherally but tightly associated with membranes via hydrophobic interactions and metal ions. We also report that the C terminus of Mrs6p is important for maintaining the solubility of the protein because its deletion or replacement with the C terminus of RabGDI results in a protein that localizes only to membranes.