Current models for nucleotide sugar use in the Golgi apparatus predict a critical role for the lumenal nucleoside diphosphatase. After transfer of sugars to endogenous macromolecular acceptors, the enzyme converts nucleoside diphosphates to nucleoside monophosphates which in turn exit the Golgi lumen in a coupled antiporter reaction, allowing entry of additional nucleotide sugar from the cytosol. To test this model, we cloned the gene for the S. cerevisiae guanosine diphosphatase and constructed a null mutation. This mutation should reduce the concentrations of GDP-mannose and GMP and increase the concentration of GDP in the Golgi lumen. The alterations should in turn decrease mannosylation of proteins and lipids in this compartment. In fact, we found a partial block in O- and N-glycosylation of proteins such as chitinase and carboxypeptidase Y and underglycosylation of invertase. In addition, mannosylinositolphosphorylceramide levels were drastically reduced.