We have identified a novel natural metabolite, ilimaquinone (IQ), from sea sponges that causes Golgi membranes to break down completely in vivo into small vesicular structures (called vesiculated Golgi membranes [VGMs]). Under these conditions, transport of newly synthesized proteins from endoplasmic reticulum (ER) to the cis-Golgi-derived VGMs is unaffected; however, further transport along the secretory pathway is blocked. Upon removal of the drug, VGMs reassemble rapidly into a Golgi complex, and protein transport is restored. By employing a cell-free system that reconstitutes vesicular transport between successive Golgi cisternae, we provide evidence that the inhibition of protein transport by IQ is specifically due to an inhibition of transport vesicle formation. In addition, like brefeldin A (BFA), IQ treatment prevents the association of beta-COP and ADP-ribosylation factor to the Golgi membranes; however, unlike BFA treatment, there is no retrograde transport of Golgi enzymes into ER.