The mechanism of AP-1/clathrin coat formation was analyzed using purified adaptor proteins and synthetic liposomes presenting tyrosine sorting signals. AP-1 adaptors recruited in the presence of Arf1.GTP and sorting signals were found to oligomerize to high-molecular-weight complexes even in the absence of clathrin. The appendage domains of the AP-1 adaptins were not required for oligomerization. On GTP hydrolysis induced by the GTPase-activating protein ArfGAP1, the complexes were disassembled and AP-1 dissociated from the membrane. AP-1 stimulated ArfGAP1 activity, suggesting a role of AP-1 in the regulation of the Arf1 "GTPase timer." In the presence of cytosol, AP-1 could be recruited to liposomes without sorting signals, consistent with the existence of docking factors in the cytosol. Under these conditions, however, AP-1 remained monomeric, and recruitment in the presence of GTP was short-lived. Sorting signals allowed stable recruitment and oligomerization also in the presence of cytosol. These results suggest a mechanism whereby initial assembly of AP-1 with Arf1.GTP and ArfGAP1 on the membrane stimulates Arf1 GTPase activity, whereas interaction with cargo induces oligomerization and reduces the rate of GTP hydrolysis, thus contributing to efficient cargo sorting.