Cancer progression is associated with enhanced directional cell migration, both of the tumour cells invading into the stroma and stromal cells infiltrating the tumour site. In cell-based assays to study directional cell migration, phorbol esters are frequently used as a chemotactic agent. However, the molecular mechanism by which these activators of protein kinase C (PKC) result in the establishment of a polarized migratory phenotype is not known. Here we show that CD44 expression is essential for chemotaxis towards a phorbol ester gradient. In an investigation of CD44 phosphorylation kinetics in resting and stimulated cells, Ser316 was identified as a novel site of phosphorylation following activation of PKC. PKC does not phosphorylate Ser316 directly, but rather mediates the activation of downstream Ser316 kinase(s). In transfection studies, a phosphorylation-deficient Ser316 mutant was shown to act in a dominant-negative fashion to impair chemotaxis mediated by endogenous CD44 in response to a phorbol ester gradient. Importantly, this mutation had no effect on random cell motility or the ability of cells to migrate directionally towards a cocktail of chemoattractants. These studies demonstrate that CD44 functions to provide directional cues to migrating cells without affecting the motility apparatus.