The FYVE domain binds with high specificity and avidity to phosphatidylinositol 3-phosphate. It is present in approximately 30 proteins in humans, some of which have been implicated in functions ranging from early endosome fusion to signal transduction through the TGF-beta receptor. To develop a further understanding of the biological roles of this protein family, we turned to the nematode Caenorhabditis elegans, which contains only 12 genes predicted to encode for phosphatidylinositol 3-phosphate binding, FYVE domain-containing proteins, all of which have homologs in the human genome. Each of these proteins was targeted individually by RNA interference. One protein, WDFY2, produced a strong inhibition of endocytosis when silenced. WDFY2 contains WD40 motifs and a FYVE domain, is highly conserved between species, and localizes to a set of small endosomes that reside within 100 nm from the plasma membrane. These endosomes are involved in transferrin uptake but lack the classical endosomal markers Rab5 and EEA1. Silencing of WDFY2 by siRNA in mammalian cells impaired transferrin endocytosis. These studies reveal the important, conserved role of WDFY2 in endocytosis, and the existence of a subset of early endosomes, closely associated with the plasma membrane, that may constitute the first stage of endocytic processing of internalized cargo.