Proliferation of epithelial tissues is controlled by polarized distribution of signaling receptors including the EGF receptor (EGFR). In kidney, EGFRs are segregated from soluble ligands present in apical fluid of nephrons by selective targeting to basolateral membranes. We have shown previously that the epithelial-specific clathrin adaptor AP1B mediates basolateral EGFR sorting in established epithelia. Here we show that protein kinase C (PKC)-dependent phosphorylation of Thr654 regulates EGFR polarity as epithelial cells form new cell–cell junctional complexes. The AP1B-dependent pathway does not override a PKC-resistant T654A mutation, and conversely AP1B-defective EGFRs sort basolaterally by a PKC-dependent mechanism, in polarizing cells. Surprisingly, EGFR mutations that interfere with these different sorting pathways also produce very distinct phenotypes in three-dimensional organotypic cultures. Thus EGFRs execute different functions depending on the basolateral sorting route. Many renal disorders have defects in cell polarity and the notion that apically mislocalized EGFRs promote proliferation is still an attractive model to explain many aspects of polycystic kidney disease. Our data suggest EGFR also integrates various aspects of polarity by switching between different basolateral sorting programs in developing epithelial cells. Fundamental knowledge of basic mechanisms governing EGFR sorting therefore provides new insights into pathogenesis and advances drug discovery for these renal disorders.