We have utilized siRNA-mediated depletion of the -COP subunit of COP-I to explore COP-I function in organellar compartmentalization and protein traffic. Reduction in -COP levels causes the co-localization of markers for the ER-Golgi Intermediate Compartment (ERGIC), Golgi, trans-Golgi network (TGN), and recycling endosomes in large, globular compartments. The lack of spatial differentiation of these compartments is not due to a general collapse of all cellular organelles, since markers for the early endosomes and lysosomes do not redistribute to the common structures. Anterograde trafficking of the transmembrane cargo VSV-G and of a subset of soluble cargoes is arrested within the common globular compartments. Similarly, recycling traffic of transferrin through the common compartment is perturbed. Furthermore, the trafficking of Caveolin-1 (Cav1), a structural protein of caveolae, is arrested within the globular structures. Importantly, Cav1 co-precipitates with the -subunit of COP-I, suggesting that Cav1 is a COP-I cargo. Our findings suggest that COP-I is required for the compartmentalization of the ERGIC, Golgi, TGN, and recycling endosomes and that COP-I plays a novel role in the biosynthetic transport of Cav1.