Rab7 is a key regulatory protein governing early to late endocytic membrane transport. In this study the proteasome alpha-subunit XAPC7 (also known as PSMA7, RC6-1, and HSPC in mammals) was identified to interact specifically with Rab7 and was recruited to multivesicular late endosomes through this interaction. The protein interaction domains were localized to the C terminus of XAPC7 and the N terminus of Rab7. XAPC7 was not found on early or recycling endosomes, but could be recruited to recycling endosomes by expression of a Rab7-(1-174)Rab11-(160-202) chimera, establishing a central role for Rab7 in the membrane recruitment of XAPC7. Although XAPC7 could be shown to associate with membranes bearing ubiquitinated cargo, overexpression had no impact on steady-state ubiquitinated protein levels. Most notably, overexpression of XAPC7 was found to impair late endocytic transport of two different membrane proteins, including EGFR known to be highly dependent on ubiquitination and proteasome activity for proper endocytic sorting and lysosomal transport. Decreased late endocytic transport caused by XAPC7 overexpression was partially rescued by coexpression of wild-type Rab7, suggesting a negative regulatory role for XAPC7. Nevertheless, Rab7 itself was not subject to XAPC7-dependent proteasomal degradation. Together the data establish the first direct molecular link between the endocytic trafficking and cytosolic degradative machineries.