Basolateral targeting of membrane proteins in polarized epithelial cells typically requires cytoplasmic domain sorting signals. In the familial hypercholesterolemia (FH)-Turku LDL receptor allele, a mutation of glycine 823 residue affects the signal required for basolateral targeting in MDCK cells. We show that the mutant receptor is mistargeted to the apical surface in both MDCK and hepatic epithelial cells, resulting in reduced endocytosis of LDL from the basolateral/sinusoidal surface. Consequently, virally encoded mutant receptor fails to mediate cholesterol clearance in LDL receptor-deficient mice, suggesting that a defect in polarized LDL receptor expression in hepatocytes underlies the hypercholesterolemia in patients harboring this allele. This evidence directly links the pathogenesis of a human disease to defects in basolateral targeting signals, providing a genetic confirmation of these signals in maintaining epithelial cell polarity.