Membrane fusion entails organelle docking and subsequent mixing of membrane bilayers and luminal compartments. We now present an in vitro assay of fusion, using yeast vacuoles bearing domains of either Fos or Jun fused to complementary halves of -lactamase. Upon fusion, these proteins associate to yield -lactamase activity. This assay complements the standard fusion assay (activation of pro-Pho8p in protease-deficient vacuoles by proteases from pho8⌬ vacuoles). Both the -lactamase and proPho8p activation assays of fusion show the same long kinetic delay between SNARE pairing and luminal compartment mixing. Lipidmixing occurs rapidly after SNARE pairing but well before aqueous compartment mixing. These results support a model in which SNARE pairing leads to rapid hemifusion, followed by slow further lipid rearrangement and aqueous compartment mixing. (diacylglycerol, phosphoinositides, and ergosterol) are concentrated at a ring-shaped microdomain, the ''vertex ring,'' surrounding the apposed membranes of docked vacuoles. During docking, the released Vam7p rebinds to the vacuole through its affinities for phosphatidylinositol 3-phosphate (1) and HOPS (2) and participates in the formation of trans-SNARE complexes between apposed vacuolar membranes. Bilayer fusion around the vertex ring permits lipid and aqueous compartment mixing. It has been proposed that membrane fusion may require a lipidic ''hemifusion'' intermediate, where the closely apposed membrane leaflets are fused and mix, whereas the distal leaflets and aqueous compartments remain distinct. Hemifusion has been directly observed with influenza HA (3-5), either wild-type or with a GPI-anchor in place of its transmembrane domain (TMD), in a minimal SNARE-driven liposome fusion system (6, 7) with low levels of wild-type SNARE proteins or with mutant SNARE proteins with partial TMDs that span only one bilayer leaflet (6). Hemifusion was also observed in cell-cell fusion mediated by GPI-anchored SNARE proteins expressed on the outer surface of the plasma membrane (8), suggesting that all SNARE-dependent fusion might proceed by means of hemifusion. A hemifusion intermediate was proposed for yeast vacuole fusion, based on the finding that GTP␥S allows lipid mixing while blocking the fusion-dependent activation of pro-Pho8p (9). The standard in vitro assay of vacuole fusion measures the proteolytic activation of the inactive proPho8p (alkaline phosphatase or ALP) by vacuolar proteases upon content mixing between two populations of vacuoles. One limitation of this assay is its sensitivity to reagents that inhibit the activation of ALP. We have therefore developed an in vitro assay of yeast vacuole fusion in which content mixing between two vacuole populations is measured by the reconstitution of active Escherichia coli TEM-1 -lactamase from two complementary fragments of the enzyme, each contributed from distinct vacuole populations. This fusion assay, coupled with a lipid mixing assay, has revealed that docking and lipid mixing are completed long before l...