The trafficking of ion channels to the plasma membrane is tightly controlled to ensure the proper regulation of intracellular ion homeostasis and signal transduction. Mutations of polycystin-2, a member of the TRP family of cation channels, cause autosomal dominant polycystic kidney disease, a disorder characterized by renal cysts and progressive renal failure. Polycystin-2 functions as a calcium-permeable nonselective cation channel; however, it is disputed whether polycystin-2 resides and acts at the plasma membrane or endoplasmic reticulum (ER). We show that the subcellular localization and function of polycystin-2 are directed by phosphofurin acidic cluster sorting protein (PACS)-1 and PACS-2, two adaptor proteins that recognize an acidic cluster in the carboxy-terminal domain of polycystin-2. Binding to these adaptor proteins is regulated by the phosphorylation of polycystin-2 by the protein kinase casein kinase 2, required for the routing of polycystin-2 between ER, Golgi and plasma membrane compartments. Our paradigm that polycystin-2 is sorted to and active at both ER and plasma membrane reconciles the previously incongruent views of its localization and function. Furthermore, PACS proteins may represent a novel molecular mechanism for ion channel trafficking, directing acidic cluster-containing ion channels to distinct subcellular compartments.