Using a novel in vitro assay which allows us to distinguish vesicle budding from subsequent targeting and fusion steps, we provide the first biological evidence that beta-COP, a component of non-clathrin-coated vesicles believed to mediate intraGolgi transport, is essential for transport of protein from the ER to the cis-Golgi compartment. Incubation in the presence of beta-COP specific antibodies and F(ab) fragments prevents the exit of vesicular stomatitis virus glycoprotein (VSV-G) from the ER. These results demonstrate that beta-COP is required for the assembly of coat complexes mediating vesicle budding. Fractionation of rat liver cytosol revealed that a major biologically active form of beta-COP was found in a high molecular pool (> 1,000 kD) distinct from coatomer and which promoted efficient vesicle budding from the ER. Surprisingly, rab1B could be quantitatively coprecipitated with this beta-COP containing complex and was also essential for function. We suggest that beta-COP functions in an early step during vesicle formation and that rab1B may be recruited as a component of a precoat complex which participates in the export of protein from the ER via vesicular carriers.