We have previously shown that radioactivity from [acetyl-3H]AcCoA is concentrated into isolated intact rat liver Golgi vesicles. The incorporated radioactivity occurred in acid-soluble and acid-insoluble components, and the acid-insoluble fraction included O-acetylated sialic acids (Varki, A., and Diaz, S. (1985) J. Biol. Chem. 260, 6600-6608). Nearly all of the protein-associated radioactivity was found to be in sialic acids alpha 2-6-linked to N-linked oligosaccharides on endogenous glycoproteins. Incubation of the vesicles with CMP-[3H]sialic acid resulted in labeling of a very similar group of glycoproteins. The 3H-O-acetyl groups were found at both the 7- and the 9-positions of N-acetylneuraminic acid residues at the end of the labeling reaction. Although 7-O-acetyl groups can undergo migration to the 9-position under physiological conditions, kinetic studies using O-acetyl-14C-labeled internal and O-acetyl-3H-labeled external standards indicate that during the labeling, release, and purification, negligible migration occurred. Studies with mild periodate oxidation provided further confirmation that O-acetyl esters are added directly to both the 7- and the 9-positions of the sialic acids in this system. The acid-soluble, low molecular weight component is released from the vesicles by increasing concentrations of saponin, and its exit parallels that of CMP-[14C]sialic acid taken up during the incubation. The vesicles themselves are impermeant to free acetate. However, even after short incubations, this saponin-releasable radioactivity was almost exclusively in [3H] acetate and not in [3H]acetyl-CoA. The apparent Km for accumulation of the [3H]acetate is almost identical with that for the generation of the acid-insoluble O-acetylated sialic acids. Most of this accumulation of free acetate is also blocked by coenzyme A-SH. Only a small portion arises from the action of an endogenous esterase on the 3H-O-acetylated sialic acids. Taken together, the results indicate that accumulation of free [3H]acetate occurs within the lumen of the vesicles in parallel with O-acetylation of sialic acids and is probably a product of abortive acetylation. It is not known if this reaction occurs in vivo. Permeabilization of Golgi vesicles to low molecular weight molecules with saponin does not alter the rate of acetylation substantially. Furthermore, double label studies suggest that the intact acetyl-CoA molecule does not gain access to the lumen of the vesicles. These results indicate that the acetylation reaction may have a different mechanism from previously described Golgi glycosylation reactions, wherein specific transporters concentrate sugar nucleotides for use by luminally oriented transferases.