Small GTP-binding proteins of the rab family have been implicated as regulators of membrane traffic along the biosynthetic and endocytic pathways in eukaryotic cells. We have investigated the localization and function of rab8, closely related to the yeast YPT1/SEC4 gene products. Confocal immunofluorescence microscopy and immunoelectron microscopy on filter-grown MDCK cells demonstrated that, rab8 was localized to the Golgi region, vesicular structures, and to the basolateral plasma membrane. Two-dimensional gel electrophoresis showed that rab8p was highly enriched in immuno-isolated basolateral vesicles carrying vesicular stomatitis virus-glycoprotein (VSV-G) but was absent from vesicles transporting the hemagglutinin protein (HA) of influenza virus to the apical cell surface. Using a cytosol dependent in vitro transport assay in permeabilized MDCK cells we studied the functional role of rab8 in biosynthetic membrane traffic. Transport of VSV-G from the TGN to the basolateral plasma membrane was found to be significantly inhibited by a peptide derived from the hypervariable COOH-terminal region of rab8, while transport of the influenza HA from the TGN to the apical surface and ER to Golgi transport were unaffected. We conclude that rab8 plays a role in membrane traffic from the TGN to the basolateral plasma membrane in MDCK cells.