Genetic screens performed in worms identified major regulators of the epidermal growth factor receptor (EGFR) pathway, including the ubiquitin ligase Cbl/SLI-1. Here we focus on the less-characterized Lst2 protein and confirm suppression of MAPK signals. Unexpectedly, human Lst2, a monoubiquitinylated phosphoprotein, does not localize to endosomes, despite an intrinsic phosphoinositol-binding FYVE domain. By constructing an ubiquitinylation-defective mutant and an ubiquitin fusion, we conclude that endosomal localization of Lst2, along with an ability to divert incoming EGFR molecules to degradation in lysosomes, is regulated by ubiquitinylation/deubiquitinylation cycles. Consistent with bifurcating roles, Lst2 physically binds Trim3/BERP, which interacts with Hrs and a complex that biases cargo recycling. These results establish an ubiquitin-based endosomal switch of receptor sorting, functionally equivalent to the mechanism inactivating Hrs via monoubiquitinylation.