We have investigated the intracellular trafficking of a chimeric molecule consisting of the cytoplasmic domain of the beta-amyloid precursor protein (APP) and the transmembrane region and external domain of the human transferrin receptor (TR) in Madin-Darby canine kidney cells. Newly synthesized APP-TR chimeras are selectively targeted to the basolateral surface by a tyrosine-dependent sorting signal in the APP cytoplasmic tail. APP-TR chimeras are then rapidly internalized from the basolateral surface and a significant fraction ( approximately 20-30%) are degraded. Morphological studies show that APP-TR chimeras internalized from the basolateral surface are found in tubulo-vesicular endosomal elements, internal membranes of multivesicular bodies, and lysosomes. APP-TR chimeras are also found in 60-nm diameter vesicles previously shown to selectively deliver wild-type TR to the basolateral surface; this result is consistent with the fact that 90% of internalized chimeras that are not degraded are selectively recycled back to the basolateral surface. APP-TR chimeras internalized from the apical surface are selectively transcytosed to the basolateral surface underscoring the importance of basolateral sorting in the endocytic pathway for maintaining the polarized phenotype. Tyr-653, an important element of the YTSI internalization signal in the APP cytoplasmic domain, is required for basolateral sorting in the biosynthetic and endocytic pathways. However, the structural features for basolateral sorting differ from those required for internalization.