ERBB2 is a receptor tyrosine kinase present on the basolateral membrane of polarized epithelia and has important functions in organ development and tumorigenesis. Using mutagenic analyses and Madin-Darby canine kidney (MDCK) cells, we have investigated the signals that regulate basolateral targeting of ERBB2. We show that basolateral delivery of ERBB2 is dependent on a novel bipartite juxtamembrane sorting signal residing between Gln-692 and Thr-701. The signal shows only limited sequence homology to known basolateral targeting signals and is both necessary and sufficient for correct sorting of ERBB2. In addition we demonstrate that this motif can function as a dominant basolateral targeting signal by its ability to redirect the apically localized P75 neurotrophin receptor to the basolateral membrane domain of polarized epithelial cells. Interestingly, LLC-PK1 cells, which are deficient for the micro 1B subunit of the AP1B adaptor complex, missort a large proportion of ERBB2 to the apical membrane domain. This missorting can be partially corrected by the introduction of micro 1B, suggesting a possible role for AP1B in ERBB2 endosomal trafficking. Furthermore, we find that the C-terminal ERBIN binding domain of ERBB2 is not necessary for its basolateral targeting in MDCK cells.