The finding that ADP-ribosylation factor (ARF) can activate phospholipase D has led to debate as to whether ARF recruits coat proteins through direct binding or indirectly by catalytically increasing phosphatidic acid production. Here we test critical aspects of these hypotheses. We find that Golgi membrane phosphatidic acid levels do not rise—in fact they decline—during cell-free budding reactions. We confirm that the level of membrane-bound ARF can be substantially reduced without compromising coat assembly [Ktistakis, N. T., Brown, H. A., Waters, M. G., Sternweis, P. C. & Roth, M. G. (1996) J. Cell Biol. 134, 295–306], but find that under all conditions, ARF is present on the Golgi membrane in molar excess over bound coatomer. These results do not support the possibility that the activation of coat assembly by ARF is purely catalytic, and they are consistent with ARF forming direct interactions with coatomer. We suggest that ARF, like many other G proteins, is a multifunctional protein with roles in trafficking and phospholipid signaling.