We studied the ligand-induced endocytosis of the yeast alpha-factor receptor Ste2p by immuno-electron microscopy. We observed and quantitated time-dependent loss of Ste2p from the plasma membrane of cells exposed to alpha-factor. This ligand-induced internalization of Ste2p was blocked in the well-characterized endocytosis-deficient mutant sac6Delta. We provide evidence that implicates furrow-like invaginations of the plasma membrane as the site of receptor internalization. These invaginations are distinct from the finger-like plasma membrane invaginations within actin cortical patches. Consistent with this, we show that Ste2p is not located within the cortical actin patch before and during receptor-mediated endocytosis. In wild-type cells exposed to alpha-factor we also observed and quantitated a time-dependent accumulation of Ste2p in intracellular, membrane-bound compartments. These compartments have a characteristic electron density but variable shape and size and are often located adjacent to the vacuole. In immuno-electron microscopy experiments these compartments labeled with antibodies directed against the rab5 homologue Ypt51p (Vps21p), the resident vacuolar protease carboxypeptidase Y, and the vacuolar H+-ATPase Vph1p. Using a new double-labeling technique we have colocalized antibodies against Ste2p and carboxypeptidase Y to this compartment, thereby identifying these compartments as prevacuolar late endosomes.