The S. cerevisiae VPSIO (vacuolar protein sorting) gene encodes a type I transmembrane protein of 1577 amino acids required for the sorting of the soluble vacuolar protein carboxypeptidase Y (CPY). Mutations in VPSlO result in the selective missorting and secretion of CPY; all other vacuolar proteins tested are delivered to the vacuole in vpsf0 mutants. Chemical cross-linking studies demonstrate that VpslOp and the Golgi-modified precursor form of CPY directly interact. A single amino acid change in the CPY vacuolar sorting signal prevents this interaction. VpslOp also interacts with a hybrid protein containing the CPY sorting signal fused to the normally secreted enzyme invertase. Subcellular fractionation indicates that the majority of VpslOp is localized to a late Golgi compartment where vacuolar proteins are sorted. We propose that VPSfO encodes a CPY sorting receptor that executes multiple rounds of sorting by cycling between the late Golgi and a prevacuolar endosome-like compartment.