Phospholipase D (PLD) is a phospholipid hydrolyzing enzyme whose activation has been implicated in mediating signal transduction pathways, cell growth, and membrane trafficking in mammalian cells. Several laboratories have demonstrated that small GTP-binding proteins including ADP-ribosylation factor (ARF) can stimulate PLD activity in vitro and an ARF-activated PLD activity has been found in Golgi membranes. Since ARF-1 has also been shown to enhance release of nascent secretory vesicles from the TGN of endocrine cells, we hypothesized that this reaction occurred via PLD activation. Using a permeabilized cell system derived from growth hormone and prolactin-secreting pituitary GH3 cells, we demonstrate that immunoaffinity-purified human PLD1 stimulated nascent secretory vesicle budding from the TGN approximately twofold. In contrast, a similarly purified but enzymatically inactive mutant form of PLD1, designated Lys898Arg, had no effect on vesicle budding when added to the permeabilized cells. The release of nascent secretory vesicles from the TGN was sensitive to 1% 1-butanol, a concentration that inhibited PLD-catalyzed formation of phosphatidic acid. Furthermore, ARF-1 stimulated endogenous PLD activity in Golgi membranes approximately threefold and this activation correlated with its enhancement of vesicle budding. Our results suggest that ARF regulation of PLD activity plays an important role in the release of nascent secretory vesicles from the TGN.