Both in vivo and in vitro the distribution of the resident plasma membrane adhesion protein, CD44, is restricted to the basolateral domain of polarized epithelial cells, suggesting a role in interepithelial interactions. To determine how this localization might be regulated, a range of CD44 cytoplasmic domain mutations were generated and a minimal 5 amino acid sequence, His(330)-Leu-Val-Asn-Lys(334), was identified which when deleted results in expression of CD44 on the apical microvillal membrane, Further mutagenesis throughout this regions pinpointed a critical di-hydrophobic motif, Leu(331)/Val(332), The ability of wild type but not mutant CD44 cytoplasmic domains to redirect an apically targeted protein, placental alkaline phosphatase, to the basolateral plasma membrane demonstrates that this sequence can function as a dominant localization signal. This His(330)-Lys(334) sequence is spatially separate from other CD44 regulatory elements and as discussed here, a comparison with known basolateral sorting sequences identified in other transmembrane proteins suggests that a distinct mechanism operates to retain resident plasma membrane proteins in their correct plasma membrane subdomains.