PACS-1 is a cytosolic sorting protein that directs the localization of membrane proteins in the trans-Golgi network (TGN)/endosomal system. PACS-1 connects the clathrin adaptor AP-1 to acidic cluster sorting motifs contained in the cytoplasmic domain of cargo proteins such as furin, the cation-independent mannose-6-phosphate receptor and in viral proteins such as human immunodeficiency virus type 1 Nef. Here we show that an acidic cluster on PACS-1, which is highly similar to acidic cluster sorting motifs on cargo molecules, acts as an autoregulatory domain that controls PACS-1-directed sorting. Biochemical studies show that Ser278 adjacent to the acidic cluster is phosphorylated by CK2 and dephosphorylated by PP2A. Phosphorylation of Ser278 by CK2 or a Ser278-->Asp mutation increased the interaction between PACS-1 and cargo, whereas a Ser278-->Ala substitution decreased this interaction. Moreover, the Ser278-->Ala mutation yields a dominant-negative PACS-1 molecule that selectively blocks retrieval of PACS-1-regulated cargo molecules to the TGN. These results suggest that coordinated signaling events regulate transport within the TGN/endosomal system through the phosphorylation state of both cargo and the sorting machinery.