Abstract. Receptor-mediated endocytosis begins with the binding of ligand to receptors in clathrin-coated pits followed by the budding of the pits away from the membrane. We have successfully reconstituted this sequence in vitro. Highly purified plasma membranes labeled with gold were obtained by incubating cells in the presence of anti-LDL receptor IgG-gold at 4°C, attaching the labeled cells to a poly-L-lysine-coated substratum at 4°C and then gently sonicating them to remove everything except the adherent membrane . Initially the gold label was clustered over flat, clathrincoated pits. After these membranes were warmed to 37°C for 5-10 min in the presence of buffer that con-1THIN a cell, coated vesicles form from coated pits (Anderson et al ., 1977;van Deurs et al., 1989) . Besides transforming into endocytic vesicles, coated pits also control the clustering of receptors that ligands use to enter cells by receptor-mediated endocytosis (Anderson, 1991). Selective mutagenesis ofthese receptors has revealed that their cytoplasmic domains contain an amino acid sequence that is necessary for efficient internalization (Chen et al ., 1990;Collawn et al., 1990;Ktistakis et al., 1990). However, the identification ofthe molecular elements(s) within coated pits that recognize these cytoplasmic domains remains to be made.Isolated coated vesicles have been useful for analyzing the structure, protein composition, and in vitro assembly of the clathrin lattice (Keen, 1990) . The lattice is composed of two subunits: (a) the clathrin triskelion, which is constructed from three 180-kD and three 30-35 kD proteins and forms the polygonal mesh work and (b) the AP (Assembly Protein [Keen, 1990] or Adaptor Protein [Pearse, 1988])' subunit, which is created from two sets of threeproteins (100-110, 50, and 16-18 kD) and appears to link the lattice to the plasma membrane (Vigers et al ., 1986). There are two different forms ofthe AP subunit: AP-1 and AP-2. These two isoforms differ in protein composition and location within the cell . tained cytosol extract, Cal+, and ATP, the coated pits rounded up and budded from the membrane, leaving behind a membrane that was devoid of LDL gold. Simultaneous with the loss of the ligand, the clathrin triskelion and the AP-2 subunits of the coated pit were also lost. These results suggest that the budding of a coated pit to form a coated vesicle occurs in two steps: (a) the spontaneous rounding of the flat lattice into a highly invaginated coated pit at 37°C; (b) the ATP, 150 /AM Cal+, and cytosolic factor(s) dependent fusion of the adjoining membrane segments at the neck of the invaginated pit.