The metalloproteinase ADAM17 activates ErbB signalling by releasing ligands from the cell surface, a key step underlying epithelial development, growth and tumour progression. However, mechanisms acutely controlling ADAM17 cell-surface availability to modulate the extent of ErbB ligand release are poorly understood. Here, through a functional genome-wide siRNA screen, we identify the sorting protein PACS-2 as a regulator of ADAM17 trafficking and ErbB signalling. PACS-2 loss reduces ADAM17 cell-surface levels and ADAM17-dependent ErbB ligand shedding, without apparent effects on related proteases. PACS-2 co-localizes with ADAM17 on early endosomes and PACS-2 knockdown decreases the recycling and stability of internalized ADAM17. Hence, PACS-2 sustains ADAM17 cell-surface activity by diverting ADAM17 away from degradative pathways. Interestingly, Pacs2-deficient mice display significantly reduced levels of phosphorylated EGFR and intestinal proliferation. We suggest that this mechanism controlling ADAM17 cell-surface availability and EGFR signalling may play a role in intestinal homeostasis, with potential implications for cancer biology.