How the occupied KDEL receptor ERD2 is sorted into COPI vesicles for Golgi-to-ER transport is largely unknown. Here, interactions between proteins of the COPI transport machinery occurring during a "wave" of transport of a KDEL ligand were studied in living cells. FRET between CFP and YFP fusion proteins was measured by multifocal multiphoton microscopy and bulk-cell spectrofluorimetry. Ligand binding induces oligomerization of ERD2 and recruitment of ARFGAP to the Golgi, where the (ERD2)n/ARFGAP complex interacts with membrane-bound ARF1. During KDEL ligand transport, interactions of ERD2 with beta-COP and p23 decrease and the proteins segregate. Both p24a and p23 interact with ARF1, but only p24 interacts with ARFGAP. These findings suggest a model for how cargo-induced oligomerization of ERD2 regulates its sorting into COPI-coated buds.