Insulin stimulates translocation of the glucose transporter isoform 4 (Glut4) from an intracellular storage compartment to the plasma membrane in fat and skeletal muscle cells. At present, the nature of the Glut4 storage compartment is unclear. According to one model, this compartment represents a population of preformed small vesicles that fuse with the plasma membrane in response to insulin stimulation. Alternatively, Glut4 may be retained in large donor membranes, and insulin stimulates the formation of transport vesicles that deliver Glut4 to the cell surface. Finally, insulin can induce plasma membrane fusion of the preformed vesicles and, also, stimulate the formation of new vesicles. In extracts of fat and skeletal muscle cells, Glut4 is predominantly found in small insulin-sensitive 60-70 S membrane vesicles that may or may not artificially derive from large donor membranes during cell homogenization. Here, we use a cell-free reconstitution assay to demonstrate that small Glut4-containing vesicles are formed from large rapidly sedimenting donor membranes in a cytosol-, ATP-, time-, and temperature-dependent fashion and, therefore, do not represent an artifact of homogenization. Thus, small insulin-responsive vesicles represent the major form of Glut4 storage in the living adipose cell. Fusion of these vesicles with the plasma membrane may be largely responsible for the primary effect of insulin on glucose transport in fat tissue. In addition, our results suggest that insulin may also stimulate the formation of Glut4 vesicles and accelerate Glut4 recycling to the plasma membrane.