Although combinatorial signaling through the ErbB network is implicated in certain types of human cancer, the specifics of how particular receptors contribute to the transformed phenotype are not well understood. The goal of this study was to identify epidermal growth factor (EGF) receptor-dependent cell signaling abnormalities specifically associated with mutations in a previously described 679-LL lysosomal sorting signal, which restrict ligand-dependent receptor downregulation by promoting recycling. Importantly, the 679-LL signal is not conserved in any of the other members of the ErbB receptor family suggesting its physiological function may be tightly regulated during EGF receptor-dependent signaling. Our data indicate that cells expressing receptors with an inactive 679-AA signal are rapidly transported to Rab4+ early endosomes after they are internalized in contrast to wild-type receptors that are localized to early endocytic antigen 1 (EEA1)+ early endosomes. Divergent trafficking in early endosomes is associated with prolonged activation of p44/42 mitogen-activated protein kinases (MAPK) but not Akt. Gab1 appears to be the critical signaling molecule facilitating prolonged MAPK signaling, and activated Gab1 is recruited to early endosomes in 679-AA receptor-expressing cells. Activated Gab1 is also recruited to early endosomes in breast cancer cells characterized by high levels of EGF receptor-ErbB2 heterodimers, suggesting 679-AA expressing cells recapitulate certain aspects of EGF receptor signaling and transformation by activated ErbB2. Phosphatidylinositol 3-kinase (PI3K)-dependent membrane translocation known to be important for maintaining Gab1 activity in other settings was dispensable. We conclude that 679-LL has dual functions in EGF receptor trafficking and threshold signaling through a subset of signaling molecules including p44/42 MAPK and Gab1.