A major role of the Golgi apparatus in liver is the terminal glycosylation of secreted serum proteins and of plasma membrane glycoproteins. Galactosyltransferase is a membrane-bound Golgi enzyme that transfers galactose directly from uridine diphosphogalactose (UDP-Gal) to terminal N-acetylglucosamine groups of N-asparagine-linked glycoproteins during secretion. Sialytransferase then transfers sialic acid from cytidine monophosphosialic acid (CMP-NAN) to the newly added terminal galactose of the glycoprotein. In the cell, the transfer reaction must occur on the lumen side of the Golgi membrane. UDP-Gal is synthesized mainly in the cytoplasm and CMP-NAN is synthesized in the nucleus in liver. An important question for understanding the mechanism is, how do these nucleotide sugars gain access to the transferases? A second question involves uridine diphosphate (UDP), a highly inhibitory product of galactosyltransferase. How is UDP removed from the lumen of the Golgi fast enough to prevent product inhibition of the galactosyltransferase? We have shown that isolated Golgi, although vesiculated, retains its original orientation. The vesicles are oriented with greater than 90% of both galactosyltransferase and sialyl-transferase on the luminal side of the vesicles. Using intact vesicles, we can show that UDP-Gal is taken up via a saturable carrier system present in the Golgi membrane. During galactosylation in vitro, UDP formed in the lumen of Golgi vesicles is rapidly converted to UMP by a nucleoside diphosphatase in the lumen. Uridine monophosphate, which is much less inhibitory to the galactosyltransferase than UDP, is then transported out of the lumen by a second carrier and is broken down further to uridine by 5'-nucleotidase on the cytoplasmic side of the Golgi vesicles. The transport of nucleotides appears unique to the Golgi membranes, since neither rough endoplasmic reticulum nor plasma membrane vesicles from rat liver accumulate these nucleotides.