Ubiquitin conjugation to receptor tyrosine kinases is a critical biochemical step in attenuating their signaling through lysosomal degradation. Our previous studies have established Cbl as an E3 ubiquitin ligase for ubiquitinylation and degradation of platelet-derived growth factor receptor (PDGFR) alpha and PDGFRbeta. However, the role of endogenous Cbl in PDGFR regulation and the molecular mechanisms of this regulation remain unclear. Here, we demonstrate that endogenous Cbl is essential for ligand-induced ubiquitinylation and degradation of PDGFRbeta; this involves the Cbl TKB domain binding to PDGFRbeta phosphotyrosine 1021, a known phospholipase C (PLC) gamma1 SH2 domain-binding site. Lack of Cbl or ablation of the Cbl-binding site on PDGFRbeta impedes receptor sorting to the lysosome. Cbl-deficient cells also show more PDGF-induced PLCgamma1 association with PDGFRbeta and enhanced PLC-mediated cell migration. Thus, Cbl-dependent negative regulation of PDGFRbeta involves a dual mechanism that concurrently promotes ubiquitin-dependent lysosomal sorting of the receptor and competitively reduces the recruitment of a positive mediator of receptor signaling.