The intercalated epithelial cell exists in two interconvertible forms in vivo, one where band 3 protein is apical and the other where it is basolateral. We seeded an immortalized clone of these cells at low density and found that band 3 was apical at confluence. There was little or no apical endocytosis. But when the cells were plated at high density, band 3 was basolateral, and there was vigorous apical endocytosis. Extracellular matrix produced by high density cells was able to retarget band 3 in low density cells and to induce apical endocytosis, as did a 230 kd protein partially purified from this matrix. Therefore, polarized targeting of some proteins is determined by external cues that might determine their polarity by reorganizing the cytoplasm.