The ras-related GTPase rab5 is rate-limiting for homotypic early endosome fusion. We used a yeast two-hybrid screen to identify a rab5 interacting protein, rab5ip. The cDNA sequence encodes a ubiquitous 75-kDa protein with an N-terminal transmembrane domain (TM), a central coiled-coil structure, and a C-terminal region homologous to several centrosome-associated proteins. rab5ip lacking the transmembrane domain (rab5ipTM(-)) had a greater affinity in vitro for rab5-guanosine 5'-O-2-(thio)diphosphate than for rab5-guanosine 5'-3-O-(thio)triphosphate. In transfected HeLa cells, rab5ipTM(-) was partly cytosolic and localized (by immunofluorescence) with a rab5 mutant believed to be in a GDP conformation (GFP-rab5(G78A)) but not with GFP-rab5(Q79L), a GTPase-deficient mutant. rab5ip with the transmembrane domain (rab5ipTM(+)) was completely associated with the particulate fraction and localized extensively with GFP-rab5(wt) in punctate endosome-like structures. Overexpression of rab5ipTM(+) using Sindbis virus stimulated the accumulation of fluid-phase horseradish peroxidase by BHK-21 cells, and homotypic endosome fusion in vitro was inhibited by antibody against rab5ip. rab5ipTM(-) inhibited rab5(wt)-stimulated endosome fusion but did not inhibit fusion stimulated by rab5(Q79L). rab5ip represents a novel rab5 interacting protein that may function on endocytic vesicles as a receptor for rab5-GDP and participate in the activation of rab5.