The Arf1-directed GTPase-activating protein ArfGAP1 is a Golgi-localized protein that controls the dynamics of the COPI coat of carriers that mediate transport in the endoplasmic reticulumGolgi shuttle. Previously the interaction of ArfGAP1 with the Golgi was allocated to a portion of the non-catalytic, carboxyl part of the protein, but the mechanism of this interaction has not been established. In this study we identify a short stretch in the non-catalytic part of ArfGAP1 (residues 204 -214) in which several hydrophobic residues contribute to Golgi localization. Even single alanine replacement of two of these residues (Leu-207 and Trp-211) strongly diminished Golgi localization. Mutations in the hydrophobic residues also diminished the in vitro activity of ArfGAP1 on Arf1 bound to Golgi membranes. The stretch containing the hydrophobic residues was recently shown to mediate the binding of ArfGAP1 to loosely packed lipids of highly curved liposomes (Bigay, J., Casella, J. F., Drin, G., Mesmin, B., and Antonny, B. (2005) EMBO J. 24, 2244 -2253). Whereas short fragments containing the hydrophobic stretch were not Golgi-localized, a proximal 10-residue inframe insertion that is present in new ArfGAP1 isoforms that we identified in brain and heart tissues could confer Golgi localization on these fragments. This localization was abrogated by alanine replacement of residues Phe-240 or Trp-241 of the insertion sequence but not by their replacement with leucines. Our findings indicate that ArfGAP1 interacts with the Golgi through multiple hydrophobic motifs and that alternative modes of interaction may exist in tissue-specific ArfGAP1 isoforms.Membrane traffic in the endoplasmic reticulum-Golgi shuttle is mediated by the COPI 3 and COPII trafficking systems. The COPII system mediates the initial exit from the endoplasmic reticulum, whereas subsequent transport to the Golgi apparatus and retrograde Golgi to endoplasmic reticulum traffic involves COPI carriers. The COPI and COPII coats are composed of evolutionarily distinct sets of proteins yet follow similar pathways of coat assembly and disassembly (for recent reviews see Refs. 1-3). In both systems a small GTPase (Arf1 and Sar1 for COPI and COPII, respectively) plays a key regulatory role. Following activation by a guanine nucleotide exchange protein, the GTPase translocates from cytosol to the organelle membrane, where it initiates the process of coat formation by the direct binding of coat subunits (4 -6). The coat in turn recruits cargo and polymerizes causing membrane deformation to form a bud.In the second phase of the GTPase cycle of Arf1 and Sar1, bound GTP is hydrolyzed with the aid of a GTPase-activating protein (GAP). The hydrolysis of GTP is a prerequisite for coat dissociation, and its inhibition leads to the accumulation of coated vesicles that are prevented from fusing with the target membrane (4, 7). The GAP for Sar1 is a subunit of the first layer of the COPII coat, the Sec23/24 complex (8). ArfGAPs constitute a large family of proteins containing a hi...