The "uncovering enzyme," which catalyzes the second step in the formation of the mannose 6-phosphate recognition marker on lysosomal enzyme oligosaccharides, resides primarily in the trans-Golgi network and cycles between this compartment and the plasma membrane. An analysis of green fluorescent protein-uncovering enzyme chimeras revealed that the transmembrane segment and the first 11 residues of the 41-residue-cytoplasmic tail are sufficient for retention in the trans-Golgi network. The next eight residues (486YAYHPLQE493) facilitate exit from this compartment. Kinetic studies demonstrated that the 488YHPL491 sequence also mediates rapid internalization at the plasma membrane. This motif binds adaptor protein-2 in glutathione S-transferase-uncovering enzyme-cytoplasmic tail pull-down assays, indicating that the uncovering enzyme is endocytosed via clathrin-coated vesicles. Consistent with this finding, endogenous uncovering enzyme was detected in purified clathrin-coated vesicles. The enzyme with a Y486A mutation is internalized normally but accumulates on the cell surface because of increased recycling to the plasma membrane. This residue is required for efficient return of the enzyme from endosomes to the trans-Golgi network. These findings indicate that the YAYHPLQE motif is recognized at several sorting sites, including the trans-Golgi network, the plasma membrane, and the endosome.