The polarization of yeast and animal cells relies on membrane sterols for polar targeting of proteins to the plasma membrane, their polar endocytic recycling and restricted lateral diffusion. However, little is known about sterol function in plant-cell polarity. Directional root growth along the gravity vector requires polar transport of the plant hormone auxin. In Arabidopsis, asymmetric plasma membrane localization of the PIN-FORMED2 (PIN2) auxin transporter directs root gravitropism. Although the composition of membrane sterols influences gravitropism and localization of two other PIN proteins, it remains unknown how sterols contribute mechanistically to PIN polarity. Here, we show that correct membrane sterol composition is essential for the acquisition of PIN2 polarity. Polar PIN2 localization is defective in the sterol-biosynthesis mutant cyclopropylsterol isomerase1-1 (cpi1-1) which displays altered sterol composition, PIN2 endocytosis, and root gravitropism. At the end of cytokinesis, PIN2 localizes initially to both newly formed membranes but subsequently disappears from one. By contrast, PIN2 frequently remains at both daughter membranes in endocytosis-defective cpi1-1 cells. Hence, sterol composition affects post-cytokinetic acquisition of PIN2 polarity by endocytosis, suggesting a mechanism for sterol action on establishment of asymmetric protein localization.