We have established an efficient transient expression system with several vacuolar reporters to study the roles of endosomal sorting complex required for transport (ESCRT)-III subunits in regulating the formation of intraluminal vesicles of prevacuolar compartments (PVCs)/multivesicular bodies (MVBs) in plant cells. By measuring the distributions of reporters on/within the membrane of PVC/MVB or tonoplast, we have identified dominant negative mutants of ESCRT-III subunits that affect membrane protein degradation from both secretory and endocytic pathways. In addition, induced expression of these mutants resulted in reduction in luminal vesicles of PVC/MVB, along with increased detection of membrane-attaching vesicles inside the PVC/MVB. Transgenic Arabidopsis (Arabidopsis thaliana) plants with induced expression of ESCRT-III dominant negative mutants also displayed severe cotyledon developmental defects with reduced cell size, loss of the central vacuole, and abnormal chloroplast development in mesophyll cells, pointing out an essential role of the ESCRT-III complex in postembryonic development in plants. Finally, membrane dissociation of ESCRT-III components is important for their biological functions and is regulated by direct interaction among Vacuolar Protein Sorting-Associated Protein20-1 (VPS20.1), Sucrose Nonfermenting7-1, VPS2.1, and the adenosine triphosphatase VPS4/SUPPRESSOR OF K⁺ TRANSPORT GROWTH DEFECT1.