How recycling receptors are segregated from down-regulated receptors in the endosome is unknown. In previous studies, we demonstrated that substitutions in the transferrin receptor (TR) transmembrane domain (TM) convert the protein from an efficiently recycling receptor to one that is rapidly down regulated. In this study, we demonstrate that the 'signal' within the TM necessary and sufficient for down-regulation is Thr11Gln17Thr19 (numbering in TM). Transplantation of these polar residues into the wild-type TR promotes receptor down-regulation that can be demonstrated by changes in protein half-life and in receptor recycling. Surprisingly, this modification dramatically increases the TR internalization rate as well (~79% increase). Sucrose gradient centrifugation and cross-linking studies reveal that propensity of the receptors to self-associate correlates with down-regulation. Interestingly, a number of cell surface proteins that contain TM polar residues are known to be efficiently down-regulated, whereas recycling receptors for low-density lipoprotein and transferrin conspicuously lack these residues. Our data, therefore, suggest a simple model in which specific residues within the TM sequences dramatically influence the fate of membrane proteins after endocytosis, providing an alternative signal for down-regulation of receptor complexes to the well-characterized cytoplasmic tail targeting signals.