The KEX2 protease (product of the KEX2 gene) functions late in the secretory pathway of Saccharomyces cerevisiae by cleaving the polypeptide chains of prepro-killer toxin and prepro-alpha-factor at paired basic amino acid residues. The intracellular vesicles containing KEX2 protease sedimented in density gradients to a position distinct from those containing mannosyltransferase I (product of the MNN1 gene), a marker enzyme for the Golgi complex. The recovery of intact compartments containing these enzymes approached 80% after sedimentation. We propose that the KEX2 protease and mannosyltransferase I reside within distinct compartments.