The trimeric Vps29–Vps35–Vps26 sub‐complex of retromer mediates retrograde transport of transmembrane proteins from endosomes to the trans‐Golgi network. Our group has recently identified a Vps26 paralogue, Vps26B, which is able to suppress the expression of Vps26A when exogenously expressed in mammalian cells and defines a distinct retromer complex (Vps26B‐retromer) in vivo and in vitro. In this study, we use HEK293 cells stably expressing either Vps26A‐myc or Vps26B‐myc to address the role of retromer cargo transport and subcellular localization of the two core retromer complexes as defined by the two mammalian‐specific Vps26 paralogues. Vps26B‐retromer, like Vps26A‐retromer, associates with TBC1D5 and GOLPH3. In contrast, no interaction between Vps26B‐retromer and cation‐independent mannose 6‐phosphate receptor (CI‐M6PR) was detected, leading to a degradation of this receptor and an increase in cathepsin D secretion. Colocalization of Vps26 paralogues with different endosomally located Rab proteins shows prolonged association of Vps26B‐retromer with maturing endosomes relative to Vps26A‐retromer. Interestingly, the cycling of CI‐M6PR is restored upon deletion of the variable Vps26B C‐terminal region indicating that this region is directly responsible for the differential function of the two paralogues. In summary, we show that the two distinct retromer complexes defined by different Vps26 paralogues are not functionally equivalent and that the Vps26B C‐terminal region can control cargo selection of the Vps26B‐retromer.