Ypt51p, a small GTPase of Saccharomyces cerevisiae, has been previously identified as a structural homolog of mammalian Rab5. Although disruption analysis revealed that the protein is required for endocytic transport and for vacuolar protein sorting, the precise step controlled by Ypt51p was not determined. In this work we show that by heterologous expression in animal cells Ypt51p was targeted to Rab5-positive early endosomes and stimulated endocytosis. Furthermore, two Ypt51p mutants induced similar morphological alterations as the corresponding Rab5 mutants. Also in yeast cells Ypt51p was found to be required at an early step in endocytic membrane traffic, since alpha-factor accumulated in an early endocytic intermediate in the absence of Ypt51p. Cell fractionation analysis revealed cofractionation of Ypt51p with endocytic intermediates, while no association with the late Golgi compartment could be detected. Indirect immunofluorescence microscopy allowed us to morphologically identify the Ypt51p-containing compartment. Similar to the mammalian system larger Ypt51p-positive structures were revealed upon expression of Ypt51p Q66L. These structures were also positive for alpha-factor receptor and for carboxypeptidase Y, thus providing direct evidence for their endocytic nature and for the convergence of the vacuolar biosynthetic and endocytic pathways.