In retinal photoreceptors, highly polarized organization of the light-sensitive organelle, the rod outer segment, is maintained by the sorting of rhodopsin and its associated proteins into distinct post-Golgi vesicles that bud from the trans-Golgi network (TGN) and by their vectorial transport toward the rod outer segment. We have developed an assay that reconstitutes the formation of these vesicles in a retinal cell-free system. Vesicle formation in this cell-free assay is ATP-, GTP-, and cytosol-dependent. In frog retinas vesicle budding also proceeds at 0 degrees C, both in vivo and in vitro. Vesicles formed in vitro are indistinguishable from the vesicles formed in vivo by their buoyant density, protein composition, topology, and morphology. In addition to the previously identified G-proteins, these vesicles also contain rab11. Concurrently with vesicle budding, resident proteins are retained in the TGN. Collectively these data suggest that rhodopsin and its associated proteins are sorted upon exit from the TGN in this cell-free system. Removal of membrane-bound GTP-binding proteins of the rab family by rab GDP dissociation inhibitor completely abolishes formation of these vesicles and results in the retention of rhodopsin in the Golgi. A monoclonal antibody to the cytoplasmic (carboxy-terminal) domain of rhodopsin and its Fab fragments strongly inhibit vesicle formation and arrest newly synthesized rhodopsin in the TGN rather than the Golgi. Therefore rhodopsin sorting at the exit from the TGN is mediated by the interaction of its cytoplasmic domain with the intracellular sorting machinery.