BACKGROUND: Sorting ubiquitinated epidermal growth factor receptor (EGFR) to the intralumenal vesicles of the multivesicular body requires the coordinated action of several ESCRT complexes. A central question is how EGFR transits vectorially from early, ubiquitin-binding ESCRTs to the final complex, ESCRT-III, such that cargo sequestration is coupled with intralumenal vesicle formation. RESULTS: We show that the ESCRT accessory protein HD-PTP/PTPN23 associates with EGFR and combines with the deubiquitinating enzyme UBPY/USP8 to transfer EGFR from ESCRT-0 to ESCRT-III and drive EGFR sorting to intralumenal vesicles. HD-PTP binds ESCRT-0 via two interactions with the STAM2 subunit. First, the HD-PTP Bro1 domain binds the core domain of STAM2. This is competed by the ESCRT-III subunit CHMP4B, which binds an overlapping site on HD-PTP Bro1. Second, a proline-rich peptide in HD-PTP binds the SH3 domain of STAM2. Similar proline-rich peptides on UBPY also bind STAM2 SH3 to facilitate EGFR deubiquitination. Hence, locally recruited UBPY would be expected to compete with HD-PTP for STAM2 binding at this second site. Indeed, we show that HD-PTP recruits UBPY to EGFR. Association of UBPY with HD-PTP involves UBPY interacting with HD-PTP-bound CHMP4B, as well as additional interaction(s) between UBPY and HD-PTP. CONCLUSIONS: This study identifies HD-PTP as a central coordinator of the ESCRT pathway for EGFR. Based on these studies, we propose a model whereby the concerted recruitment of CHMP4B and UBPY to HD-PTP and the engagement of UBPY by STAM2 displaces ESCRT-0 from HD-PTP, deubiquitinates EGFR, and releases ESCRT-0 from cargo in favor of ESCRT-III.