There is increasing evidence that ubiquitination of receptors provides an important endosomal sorting signal. Here we report that mammalian class E vacuolar protein-sorting (vps) proteins recognize ubiquitin. Both tumor susceptibility gene 101 (TSG101)/human VPS (hVPS)28 and hepatocyte growth factor receptor substrate (Hrs) cytosolic complexes bind ubiquitin-agarose. TSG101 and hVPS28 are localized to endosomes that contain internalized EGF receptor and label strongly for ubiquitinated proteins. Microinjection of anti-hVPS28 specifically retards EGF degradation and leads to endosomal accumulation of ubiquitin-protein conjugates. Likewise, depletion of TSG101 impairs EGF trafficking and causes dramatic relocalization of ubiquitin to endocytic compartments. Similar defects are found in cells overexpressing Hrs, further emphasizing the links between class E protein function, receptor trafficking, and endosomal ubiquitination.